NNIP "Active Investment in Environmental Improvement... Record High Green Bond Issuance"

[Asia Economy Reporter Minji Lee] As governments around the world actively invest in environmental improvement, the issuance of global green bonds is increasing.

According to NNIP (NN Investment Partners) on the 30th, the global green bond issuance reached 48 billion euros as of the 25th, setting a new monthly record. This amount surpasses the previous record of 44 billion euros set in September last year.

The main reason for the significant increase in green bond issuance in March is that governments worldwide have actively invested in green environmental improvements, leading to an increase in the issuance of government bonds in the form of green bonds. NNIP expects the issuance volume to continue its upward trend this year when considering all the economic benefits issuers can gain. Accordingly, NNIP has raised its issuance forecast for this year to 400 billion euros, and the global green bond trading volume is expected to exceed 1 trillion euros this year.

Green Bond Issuance Volume Worldwide Since 2013 and 2021 Outlook / Data Provided by NNIP

Bram Bos, Senior Portfolio Manager for Green Bonds, said, "The large volume of green bonds scheduled for issuance in 2020 was postponed to this year due to the COVID-19 pandemic," adding, "The green bond market has now stabilized, and issuers are refocusing their efforts on addressing the climate crisis and securing a sustainable future."

A significant portion of the new green bond issuance was government bonds. The Italian government entered the green bond market for the first time in March this year, and France issued its second green bond in March. Spain and the United Kingdom are also considering issuing green bonds. Manager Bram Bos added, "Many governments are actively implementing policies for green environmental recovery," and "Funds raised through green bond issuance will be used to build infrastructure and will significantly contribute to achieving greenhouse gas reduction targets under the Paris Agreement."

Green bonds are expected to remain an attractive option for issuers going forward. Although green bonds generally offer slightly lower yields compared to conventional bonds, their trading volume continues to increase. This growth in trading volume attracts investors willing to pay a 'greenium'?where the borrowing cost of green bonds is lower than that of conventional bonds?to purchase green bonds. This also benefits issuers by lowering borrowing costs and enhancing the attractiveness of the green bond market.

Green bonds also provide economic benefits through institutional incentives and tax advantages. Bram Bos explained, "Since 2014, the Bloomberg MSCI Euro Green Bond Index has outperformed the Bloomberg Euro Aggregate Index by about 0.30% annually," adding, "Even if green bonds yield a few basis points less than conventional bonds, their past performance has been superior, and they contribute to fostering a greener future, making the market outlook bright."

This content was produced with the assistance of AI translation services.