Green debt sales hit record levels despite climate backlash

Global green bond and loan issuance has reached a record $947 billion so far this year, according to data compiled by Bloomberg Intelligence. That’s as stock market gauges for renewables are set for their first annual gains since 2020, outperforming the S&P 500 by a wide margin, while shares of power-grid technology companies remain in favor. AI-led electricity demand is reviving investor appetite for green bonds and renewable stocks, lifting issuance, equity returns and Asia-Pacific leadership despite weaker US and European policy support. The flows are notable in a year when US President Donald Trump backed fossil fuels and dismantled clean-energy subsidies and legislation. Europe also has rolled back some of its toughest environmental rules amid concerns about growth and competitiveness. Green debt sales hit record levels despite climate backlash Investors are pouring money into climate-friendly assets despite policy rollbacks, pushing global green bond issuance to records as AI-driven power demand boosts renewables, grids and clean-energy stocks worldwide. Still, clearer policy signals and an almost 4% expected increase in global electricity demand, driven by AI, cooling and electrification needs, are lifting investor optimism. “Green investments are increasingly becoming viewed as core infrastructure and industrial plays, not just niche ESG trades,” said Melissa Cheok, associate director for ESG investment research at Sustainable Fitch. “Capital is likely flowing toward areas with clear revenue visibility, policy backing and structural demand such as grid upgrades and renewables tied to electrification.” Asia-Pacific companies and government-linked issuers raised $261 billion from green debt, up about 20% from a year earlier, with China and India backing the rollout of renewables, according to Bloomberg Intelligence. China had a record $138 billion in green bond issuance, led by its biggest lenders. It also debuted a sovereign offering in London earlier this year. The so-called greenium - the lower borrowing costs on green bonds - is most evident in Asia-Pacific, with some issuers getting more than a 14-basis-point discount for using a green label in November, according to BloombergNEF. Green bonds are often used by companies to raise money for switching to renewable energy or lower-carbon transportation. BNP Paribas SA and Credit Agricole SA are this year’s leading underwriters of green bonds, according to data compiled by Bloomberg. The amount of outstanding green bonds has grown at a 30% compound annual rate over the past five years and issuance now accounts for about 4.3% of the global total, LSE Group researchers said last month. Easing US interest rates and refinancing needs may boost global green bond sales to as much as $1.6 trillion next year, said Crystal Geng, environmental, social and governance research lead for Asia at BNP Paribas Asset Management. Green stocks have been a market leader this year. Clean-energy indexes from S&P Dow Jones Indices and WilderShares have surged 45% and 60%, respectively, though both remain below their 2021 peaks. US solar and battery storage stocks, including SolarEdge Technologies Inc., have been among the top performers, while wind turbine makers have led gains in China and Germany. India...

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