2020 could be the year of government green bonds. After the success of private companies in recent years, it could now be the States, which until now have remained on the sidelines, that take the lion's share in a market characterized by unprecedented growth rates. This is what emerges from the new report published by the Intesa Sanpaolo Studies and Research Department which, for the current year, foresees "prospects for further expansion for green government emissions in the euro area".
But first things first. In 2019, the growth of green emissions was exponential: the amount issued exceeded – in the Eurozone alone – 170 billion euro. A figure that in percentage terms corresponds to a 50 percent increase from 2018 and which brings the stock of green securities outstanding to 566 billion (data updated at the end of January). 2020 does not seem to want to be outdone: in January alone, 20 billion green bonds were placed on the market, equal to 75% of what was issued in 2019 in the first three months.
In this context, however, there are those who have remained on the sidelines: the Member States. Government green bond issuance accounted for just 2019% in 9 of the entire outstanding amount. Suffice it to say that the first issue of green government bonds took place only three years ago, in December 2016, when Poland moved.
“Today, out of a total of 50 billion government bonds outstanding globally, 21 billion are represented by the French Oat (issued in 2017 and subsequently reopened seven times), while 23 billion are made up of government issues of the Netherlands, the Belgium, Ireland and Poland”, explain the experts of Intesa Sanpaolo's Studies and Research Department.
2020 could therefore be the year of change. According to forecasts, the government green bond market in the Eurozone will be characterized by two important innovations: on the one hand we will see the entry of new issuers, on the other the expenditure dedicated to green investments will increase. It could also be the driving force the Green New Deal approved by the EU Parliament a little over a month ago. An initiative that sets challenging objectives for all states and "requires the mobilization of new public and private resources by the member states", analysts underline.
As regards green bond issues, starting will be Holland which has reopened the green DSL for 1,4 billion and, according to forecasts, it will make a new opening during the year, reaching 2 billion euros by the end of the current year.
Also to watch Belgium, which is expected to place around 2,2 billion green olo in 2020, e Ireland which is expected to issue green bonds worth 2 billion euros by the end of 2020.
A great contribution will then come from France which "recently declared that it has available green expenditure for 2020 of 8 billion which it will finance through the reopening of the Oat green 06/2039" explains Intesa, while it is expected the debut of Spain which should issue its first green bond in the coming months.
Moving from Madrid to Berlin, in the second half of the year Germany will issue twin green bonds, i.e. an issue characterized by two securities: one green and one conventional. The two bonds will have the same coupon and the same maturity, but two different Isin codes.
A similar strategy could also be implemented by Danmarks National Bank, which could issue a new model of green sovereign bonds, consisting of the issuance of a conventional bond and a "green certificate" with identical maturity. "The new certificate market will be able to provide a measure of the value that investors attribute to the green choice", comments the Intesa Studies and Research Department.
It's Italy? According to a report by Banca Imi, in 2019 new issues in our country reached 5,4 billion euros, a figure almost double compared to the previous year when the total amount reached 2,8 billion euros which brought the outstanding stock to over 11 billion euros. Of the 9 new green bonds issued in 2019, four come from what Banca IMI defines as "debutant green issuers" - namely Generali, A2A, Erg and Ubi - and another five from companies that had already issued one or more bonds green in the recent past: Enel, Iren, Ferrovie dello Stato, Hera and Terna.
News is expected in 2020 Ministry of the Economy which last December anticipated its willingness to introduce new green bonds in the range of securities open to the market. On the other hand, the 2020 Maneuver established the possibility of issuing green government bonds, paving the way for the Treasury to enter the market. Via XX Settembre, for its part, “is in the meantime carrying out in-depth market analyses to optimize future emissions and plan times and methods".
