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Green bond issuance to dip short-term due to political uncertainty, says SEB report


The green bond market delivered its second highest quarterly figure to date in Q2 2018, reaching USD 47 billion, up 21 per cent year-on-year, according to new research by Nordic corporate bank SEB.

The overall bond market has slowed in 2018 and fickle market conditions have held back issuance globally in July taking the whole market to USD 87 billion year-to-date (up only 6 per cent). Activity continues to also be affected by news of interest rate hikes and market reaction to the current political environment.
 
During H1-2018, in terms of currencies, the market shifted towards Euros, reaching 46 per cent at one point before falling back to 43 per cent year-to-date. This trend is driven by strength in the corporate EUR market, with financials as well as non-financial corporates, such as utilities, alongside sovereigns favouring EUR. Year to date green bond issuance by USD has reached 32 per cent.
 
The percentage of all SEK denominated green bond issuance surged to a world record of 16 per cent in Q2 2018, up from 6.6 per cent over the course of 2017.
 
The outlook for 2018 is positive, with heightened activity in large economies as well as in new sectors. SEB’s 2018 issuance scenario is USD 185 billion, with the possibility to surprise to the upside and cross to USD 210 billion.

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