Corporate issuance currently makes up under one-third of the total green bond market. However, S&P forecasts corporate bond issues will increase rapidly this year to reach $20 billion, up from the current $10.4 billion.
The total corporate bond market stood at $18 trillion dollars at of April 2013, according to S&P.
"Corporate green bond issuance is accelerating not only because this aids diversification of investor pools for issuers, but also because of investors' growing interest in implementing environmental, social, and governance goals," wrote S&P analysts led by Michael Wilkins in a report out on Tuesday.
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S&P's forecast came after a green bond from French power company GDF Suez last week broke previous records. At 2.5 billion euros ($3.4 billion), the money raised from the issue was almost double the previous record of 1.4 billion euros set by another French power company, Electricite de France (EDF).
"These mega deals show the rising importance of green bonds as a source of capital, driven by both the needs of corporates, as well as the desire by investors to allocate capital to socially responsible and environmentally sustainable investments. The aim for both issuers and investors alike is to develop a large and liquid market in order to reduce transaction and investment costs," Wilkins said.
The Climate Bond Initiative, a not-for-profit organization based in London, estimates the overall green bond market will reach $40 million this year and a $100 billion in 2015.
"The bulk of the growth is going to come out of corporate growth," said Sean Kidney, the organization's CEO, on Tuesday. "It is not a substantial new volume of money, but it does create a large liquid market."
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