”Has the green-bond bubble burst? And if it has, should we care?”
This is how Financial News columnist David Wighton kicks off his recent article on the would-be merits of environmentally stamped debt.
Against the backdrop of slowing growth in issuance of such debt, he points out that for the environment, such financial products may not have made any difference in the first place. Nevertheless it is bad news for the finance institutions offering them (”the City”).
Swelled, then stalled
”From next to nothing five years ago, [issuance of green bonds] swelled to about $160 billion in 2017, according to Moody’s. This time last year, the rating agency was forecasting 60 percent growth in 2018,” writes Wighton.
This is not how it eventually turned out.
” It didn’t work out that way. By the end of the third quarter, issuance was actually slightly down on 2017. Though things picked up a bit in December, the final numbers will be way below initial expectations.”
No proof of doing good
According to David Wighton it cannot be determined that green bonds provide borrowers with lowered interest compared with normal bonds. Nor does he see evidence of any green bond-financed project that would not otherwise have received funding through other sources.