(5.01) Bond Market The green bond market has grown rapidly over the years, with Bank of America Merrill Lynch estimating a need of about US$90 trillion of investments into low-carbon infrastructure through to 2030, in order to hit global growth expectations. The Chinese bond market is expected to grow from around US $3 trillion to US $32 trillion by 2030, which is not a long time away, and by 2050, Asia's financial sector is likely to be four times the size of that in the West. The global green bond market will reach US$250 billion this year, up from US$167 billion in 2018, continuing a sustained growth trajectory as investors tap into sustainable investment opportunities. In the United States, the share of maturing bonds that are high yield is expected to grow from 11 percent in 2017 to 27 percent in 2020. The green bond market is expected to remain resilient to the bearish global fixed-income market, with issuance likely to reach $180 billion in 2019, following a record high of $167 billion in 2018. The green bond market has significantly grown in the last decade: This market shows exponential value with a projected market value of $210 billion in 2019. The Green Bond market is expected to grow at least by 20% exceeding the 200 billion US-Dollar mark by the end of this year. New analysis suggests that the global green bond market is expected to grow this year. Nordic finance specialist, SEB, forecast that the green bond market grew 6% in the first 11 months of 2018 to $180bn, and will grow further to $210bn in 2019. The green bond market could grow by as little as 13% this year, according to Moody's, which has slashed its forecast after having previously anticipated a 60% rise in issuance. If macroeconomic troubles intensify, and if the global economy falls into recession in 2019, green infrastructure investment as well as prospects for green bond financing could be negatively affected. An inverted yield curve has preceded a number of previous recessions in the US and, with 10s over 2 s trading at just +13 bp, the thought is that the bond market is sending a signal that the Fed will have to pause on interest rate hikes in 2019. Globally interest rates could go higher - the US Federal Reserve could announce a rate hike before the year ends while the European Central Bank announced its intention to end its bond-buying programme by the end of the year. The Fed is projecting to raise rates to 2% by the end of 2018, a more rapid pace than anticipated by the bond market. Green bond issues are expected to double this year but will still be less than one percent of the global bond market. The global bond market could lose two huge buyers (the European Central Bank and the Bank of Japan) just as the US Treasury needs to find buyers for nearly $2 trillion in debt. A 1% increase in interest rates would according to the US Treasury's Office of Financial Research (OFR) lead to a bloodbath in the US high-grade bond market. Increases in global interest rates could further reduce the ability of governments in the region to access foreign bond markets. Egypt will issue $2.5 to 3 billion-denominated Eurobonds in the global bond market in the first half of January. Many anticipate the Federal Reserve will hike interest rates next month for the first time in a year. Many investors fear the bond market is a giant bubble at risk of collapse. Traders see only a 10 percent chance the Federal Reserve will raise interest rates at its Oct. 27-28 meeting following weaker-than-expected employment growth. See full forecast Last updated: 22 October 2019 Hi, Would you like a quick online demo of our service from an experienced member of our team? Yes No
