Europe green-bond boom may cool next year after breakneck growth

Green bonds were a rare bright spot in Europe’s lackluster primary market this year. Some of that sheen may start fading in 2019.

Photo: Paolo Gadler / Stock

A combination of market maturity and wider volatility may damp growth in euro green-bond sales after issuance more than tripled in two years, based on data compiled by Bloomberg. Other developments in green financing, such as loans or securitizations, may also take more of the spotlight.

It will be "extremely hard" for green-bond sales to maintain the same pace of growth, said Mike Wilkins, head of sustainable finance at S&P Global Ratings. "I wouldn’t be surprised if it starts to flatten out." Any slowdown would hurt Europe’s primary market, as a surge in bank issuance helped euro green-bond sales jump 18 percent this year to 53 billion euros ($60 billion) -- a marked contrast to the 10 percent decline seen in non-green issuance. It adds to the risk facing European bond sales, as the European Central Bank caps stimulus measures and the region prepares for uncertainty surrounding the U.K.’s departure from the EU.

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