Manifestation of climate change a flood or storm may

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manifestation of climate change – a flood or storm – may not directly affect a corporate bond’s value, policy action to promote the transition towards a low-carbon economy could spark a fundamental reassessment”. 4 The universe of bonds for which proceeds are used for environmentally beneficial projects, but which do not carry a green label, is still likely to be quite large (Climate Bonds Initiative (2015)). But as the green label becomes more commonly used, it becomes more and more likely that issuers will seek this label to distinguish themselves. 5 Based on an estimate of total global debt capital market issuance of $6.69 trillion in 2016 (see ).
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BIS Quarterly Review, September 2017 91 corporates in China, have provided a large share of global issuance. The maturity of green bonds is typically medium-term, averaging between seven and eight years in 2014–16, but lengthened in the first half of 2017. Issuance tends to cover a wide range of currency denominations. While supranationals have tended to issue in euros and dollars, some EME entities have made use of local currencies (Graph 1, right-hand panel). Issuers of green bonds tend to be highly rated, with only a small fraction rated below investment grade (Graph 2, left-hand panel). More bonds with earmarked claims on the cash flows of an individual project (ie project bonds) could help diversify issuers and credit risks (Standard & Poor’s (2017a), Caldecott (2012); Ehlers et al (2014)). Project bonds naturally entail higher credit risks, given the high initial uncertainties of new investment projects (Ehlers (2014)). These could cater to investors looking for higher yields. The above numbers aggregate figures from two widely used and broad-based lists of green bonds: those of the Climate Bonds Initiative (CBI) and Bloomberg. The CBI is an international non-profit organisation, funded by grants from non-profit and government sources as well as revenue from public sector contracts. Bloomberg is a widely used financial data and service provider. Both lists selectively include bonds with different types of green labels. The two lists, and hence the corresponding volumes of issuance, do not coincide. The aggregate issuance of labelled green bonds from 2007 through the second quarter of 2017 in the CBI list equals $234 billion (comprising 1,092 individual issues). By contrast, Bloomberg counted $216 billion in green bond issuance (comprising 779 individual issues). Only $169 billion (624 individual issues) worth of bonds are Rapid growth in green bond issuance most recently in EMEs Climate Bonds Initiative and Bloomberg lists of labelled green bonds, in billions of US dollars Graph 1 Green bond issuance by country of incorporation Green bond issuance since 2007 1 Years USD bn USD bn 1 Up to mid-June 2017. 2 AT, AU, BE, CA, CH, DK, ES, EE, FI, GB, IT, JP, LU, LV, NL, NO, SE and SI. 3 AE, AR, BR, CL, CO, HK, IN, IR, KR, MX, PE, PH, PL, SG, TR, TW and ZA. 4 Offshore financial centres (OFCs): BM, CR, KY, MO, MU and VG. 5 AUD, CAD, CHF, GBP, JPY, NOK, NZD and SEK. 6 BRL, CNY, COP, HUF, IDR, INR, MAD, MXN, MYR, PEN, PHP, PLN, RUB, SGD, TRY, TWD and ZAR.
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