The green bonds market is growing steadily in emerging countries

The green bonds market in emerging economies reached $52 billion in 2019. The Amundi-IFC report highlighted how this choice can bring long-term stability benefits for investors and issuers.

Green bond issuance continues to increase worldwide and emerging markets are becoming increasingly important players in a growing bond sector. The figure emerges from the second edition of the Amundi-IFC Emerging Market Green Bond Report, produced by Amundi and IFC (World Bank Group) focusing exclusively on green bond investments in emerging markets.

Find out more details about the Amundi-IFC Emerging Market Green Bond Report and read the latest business news with the Born2Invest mobile app. Our clean design lets you read articles without clutter. You can use our app with no limits on how many articles you can view.

Coronavirus causes turbulence for investors and issuers

At this stage, issuers and investors are facing the turbulence caused by the COVID-19 crisis and emerging economies have obviously not been spared. However, this crisis is showing greater resilience from green investments than traditional ones.

It will therefore be interesting to see whether, even in the future, investors will consider green issuers to be long-term oriented and flexible to counter short-term volatility.

Future investments

A future that looks promising for sustainable investment. The IFC estimates a total climate investment potential of $29.4 trillion in emerging market cities until 2030. That is a huge amount of money that will be used to finance projects with environmental and social benefits.

Globally, the positive momentum of green bonds continues to grow. Currently, this market is worth more than $700 billion, with $240 billion in issuance last year alone (3% of total global bonds issued in 2019).

The green bonds market is increasing

According to the Amundi-IFC Emerging Market Green Bond Report, emissions in emerging markets increased by 21% to $52 billion, bringing the total market size to $168 billion. Issues have been driven by greater recognition, both among issuers and investors, of the benefits they generate. That includes stable and predictable returns and greater knowledge of ESG products and strategies.

The growth continues to be driven by China and East Asia and the Pacific region (81% of the market) but other economies have also contributed, among them: India, Chile, Poland, Philippines, United Arab Emirates, and Brazil.

Hard currency issues from financial institutions

As regards the type of emissions, in 2019 about 52% were in hard currency. The most relevant sector for the use of revenues is renewable energy, followed by transport, green buildings, waste, water, biodiversity conservation, and adaptation.

The largest issuers remain financial institutions (59% of the total) followed by non-financial corporations (35%) and sovereigns (12%).

Five challenges for the green bond market in emerging countries

The report also identified the five main challenges that need to be addressed to further facilitate the expansion of the green bond market in emerging countries.

The first concerns the quality and availability of information to identify, measure and monitor green investments. The others are: procurement constraints and limited availability of green-label assets; lack of awareness and know-how about green issuance and investment in green products; overall macroeconomic and political instability; less developed capital markets with insufficient liquidity and high transaction costs.

__

(Featured image by TheDigitalWay via Pixabay)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in yahoo!finanza, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.