Although the issuance of U.S. municipal green bonds – bonds backing projects with positive environmental effects -- is increasing, and will amount to $6.3 to $7.2 billion this year, up from $4.2 billion in 2015, S&P Global Ratings believes the market could be significantly larger, according to a report, "What's Next For U.S. Municipal Green Bonds?" published today.
Among the report's findings:
- There is high potential for broader participation by municipal market issuers. Increased participation will be a function of costs relative to benefits, investor demand, and broader public support for infrastructure projects that promote sustainable long-term environmental objectives.
- Over time we expect to see metrics to evaluate the level of disclosure and environmental credentials of green bonds becoming more important to investors.
According to Managing Director Kurt Forsgren, a key question, as the market develops, is: "Will the municipal sector embrace the global trend toward greater transparency and comparability in financing public infrastructure assets that meet broad environmental objectives and investor demand,
particularly if it requires dedication to independent external review, ongoing reporting, and additional costs?"
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