In The Climate-Aligned Bond Universe China Is The Largest Country of Issuance

Shanghai,China,Pudong,dawn by 一元 马 via Flkr
Shanghai Stock Exchange By 一元 马 Via Flickr

Reports have revealed that China is the largest country of issuance in the climate aligned universe. China Railway Corporation (largest issuer with $194bn) dominates unlabeled issuance. This figure underlines the significance of bonds within the transport sector and demonstrates the key role they will play going forward in raising finance for low-carbon transportation.

China is also seen as a leader in the labelled green bond market and is the largest country of issuance in 2016 ytd.

This annual flagship report from the Climate Bonds Initiative is the only global analysis of the climate-aligned bond universe. Our analysis discovers and quantifies those bonds that are being used to finance low carbon and climate resilient infrastructure; this includes bonds that are labelled as green as well as bonds that are financing climate solutions but do not carry a label.

Climate Bonds collaboration with entities such as the CCDC, CECEP, NAFMII and the Shanghai Stock Exchange helped identify unlabeled domestic bonds.

The report’s key findings include:

· The climate-aligned bonds universe now stands at $694bn outstanding – A jump of $96bn (16%) from the 2015 figure. This total is comprised of unlabeled climate-aligned bonds at $576bn and labelled green bonds at $118bn.

· The universe is made up of over 3,590 bonds (issued from Jan 2005 to May 2016) from 780 individual issuers across transport, energy, buildings and industry, water, waste and pollution and agriculture and forestry.

· China leads the top 10 countries for climate aligned bonds with $246bn of total issuance (36%) followed by the US ($136bn/16%) then France and the United Kingdom ($64bn & $62bn, around 9% respectively).

· The Chinese RMB is the dominant currency in the climate-aligned bond universe (with 35% of the total amount outstanding), followed by the US dollar (24%) and the Euro (16%).

· Unlabelled issuance is dominated by China Railway Corporation (largest issuer with $194bn). This figure highlights the significance of bonds within the transport sector and demonstrates the continuing importance they will play in raising finance for low-carbon transportation.

· 78% of the universe is investment grade; the majority of bonds have tenors of 10 years or more; the majority are also government-backed.

· The $96bn increase on 2015 includes $94bn in new bonds from existing issuers, plus $85bn from new issuers minus $83bn of matured bonds and issuers that no longer meet our climate-aligned criteria.

· Low carbon transport was the largest single sector, accounting for $464bn (67%) of the total climate aligned universe, followed by clean energy at $130bn (19%).

· The remaining $97bn (14%) is drawn from Building and Industry, Agriculture and Forestry, Waste and Pollution, Water or Multi-Sector bonds; a small but welcomed indication towards more diversity in issuance.