The surge of impact borrowing: the magnitude and determinants of green bond supply and its heterogeneity across markets

Green bonds could play a key role in financing the investment needed to achieve the global climate and energy objectives and the UN Sustainable Development Goals. Using Bloomberg data of corporate green bond issuance from 2010 to 2017, we explore the factors affecting the size of borrowing. By employing a set of tri-dimensional elements (security characteristics, issuer characteristics, and market characteristics), we investigate the consistency of the effects across emerging and non-emerging markets. Findings suggest that, in general, issue size is positively related coupon rate, credit rating, collateral availability, and issuer's sector and financial health. Moreover, issuances in emerging markets with a more international orientation and denominated in EURO, have a higher size. Arguably, these features make bonds more reliable, secured, and return-generating for investors, which facilitates higher issue size through greater investor demand. The paper calls for policies and incentives to encourage impact borrowing through increased green bond supply.