France returns to top of global green bond ranking

This year, the green bond market has seen an incredible upswing. Last week, the volume of green bonds being issued exceeded $100 billion in less than six months. This could well set a new record for the year.

With more than €15 billion worth of green bonds issued since January, France has become a leader of green finance, ahead of the US and the Netherlands. EURACTIV’s partner La Tribune reports.

Since the start of this year, France has been the leading issuer of green bonds with $15.3 billion (around €13.4 billion), meaning it has regained its world champion title in green financing. This is according to a ranking published on Tuesday (25 June) by the British non-profit organisation Climate Bonds Initiative.

France has thus overtaken the US, the leader in 2018 and during the first quarter of 2019. It has also overtaken the Netherlands, which successfully issued its first government green bond worth €6 billion last May.

The green bond market consists of loans issued on the markets to finance projects that are exclusively ‘green’. These projects will have a positive impact on the climate and/or environment (renewable energies, reduction of CO2 emissions, etc.), and are accompanied by monitoring and reporting requirements.

This year, the green bond market has seen an incredible upswing. Last week, the volume of green bonds being issued exceeded $100 billion, and this in less than six months. This could well set a new record for the year.

“This is the first time we have achieved this milestone in the first half of the year,” said Sean Kidney, executive director of the Climate Bonds Initiative.

This milestone for the year was reached in September 2018 and November 2017 for the first time. This bodes well for the rest of this year.

HSBC, which pointed out that green bond issuance is up 57% from last year, just raised its annual forecast to be between $180-240 billion, compared to a previous forecast ranging between $140-180 billion.

In 2018, the market had disappointed, growing by only 5% to $163 billion. The American financial services company Moody’s is expecting $200 billion for this year, while the Climate Bonds Initiative is expecting $250 billion.

However, the market remains relatively small. Green bonds only account for 2% of this year’s total bond issues according to HSBC’s estimate.

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The French green bond champion is Engie

The major French group Engie ranks first among the three largest corporations issuing green bonds. In January, it issued its fifth green bond for €1 billion and issued its sixth bond (in two parts) for a total of €1.5 billion on 14 June.

Since 2014, the group, a pioneer in green finance, has issued €8.75 billion in green bonds, making it “the world’s leading corporate issuer of green bonds,” a statistic the group is pleased to report.

“Engie is committed to reconciling the company’s long-term vision with the financial objectives of investors. The green bonds, which make it possible to finance our clients’ zero-carbon transition, are an essential lever for this,” commented Judith Hartmann, the Group’s deputy chief executive officer and chief financial officer.

Of the French green bonds issued, worth €15.3 billion, the share of public sector players is significant. Their share in French green bonds amounts to €6.1 billion, according to the figures of the Climate Bonds Initiative.

Among the very active public players during the first half of the year, the public group Caisse des Dépôts et Consignations issued its first sustainable bond (green and social) for €500 million on June 13, while the state-owned public transport operator RATP issued its second green bond for €500 million on the same day.

In January, France’a state-owned railway company SNCF Réseau issued its fourth green bond to the tune of €500 million.

In May, the public establishment Société du Grand Paris, which oversees the construction of the Grand Paris Express supermarket in the Paris region, issued its third green bond for €1 billion, only two months after having issued its second one for €2 billion.

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The national bank, La Banque Postale, also issued its very first green bond in April, for an amount of €750 million.

A government-issued green bond issued in January 2017 for €7 billion placed France at the top of the ranking that year.

When it comes to green bond arrangers, French banks are also well positioned. Crédit Agricole ranked first at the end of 2018. According to financial news group Global Capital, it now ranks third worldwide, behind HSBC and Bank of America Merrill Lynch, and ahead of BNP Paribas.

[Edited by Zoran Radosavljevic]

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