Is the green bond market running out of steam? - Franklin Templeton Investments

In this piece, Gail Counihan, ESG Analyst in Franklin Templeton's Fixed Income Group, considers the growth in green bond issuance, demand from investors and potential opportunities.

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... Growth in green bond issuance has been extraordinary given they offer no credit enhancement to other bonds and carry additional reporting requirements. Demand from investors with an environmentally- focussed agenda appears to be driving green bond prices to a premium. A potential opportunity exists to identify ‘unlabelled’ debt, supportive of a sustainable future but not carrying the green bond premium. While labelled green bond growth may no longer be exponential, a clear trend is in place for more sustainability issuance, likely through more diverse instruments.

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