Further growth is expected in the rapidly expanding global green bonds market, with S&P Global Ratings forecasting a "likely" record issuance of $180bn worldwide this year, spurred on by strengthening regulations, rising environmental risk awareness and new business opportunities.

In its latest annual market outlook, the ratings giant said it expects the global green bonds market will remain resilient and enjoy a "healthy" eight per cent growth rate in 2019, putting it on course for another record year driven by "strong market fundamentals".

The prediction follows the market's record high of $167bn last year, according to the Climate Bonds Initiative.

S&P Global Ratings predicted a new record was likely to be set despite slowing global issuance overall and the "likelihood of a shift in the credit cycle".

The projections chime with Nordic bank SEB's prediction in December that the green bond market would return to impressive growth this year, following a 2018 which saw green bond issuance growth slow to just three per cent, significantly lower than the 85 per cent growth seen in 2017.

SEB suggested 2019 green bond issuance could reach as high as $210bn, with the potential for a "surprise" jump to $240bn.

Helping to spur on the continued growth this year, financial institutions in particular are likely to play a greater role in the green bond market than previously, according to the S&P Global Ratings report, increasing their share of both bond issuances and investments.

Moreover, it forecasts an acceleration of other sustainability-related financial instruments in 2019, including environmental, social and governance (ESG) bonds.

The rating agency said it still expects green bond growth to remain below the historical annual growth rate of 80 per cent "as the market matures and macroeconomic uncertainty persists", such as the gradual tightening of monetary policies in the US and Europe, it said.

The green bonds market has boomed in recent years, as more governments and corporates seek to scale up investments in low carbon and environmental projects, and the report concludes that it expects "the rise in the issuance of sustainability bonds to continue as issuers seek to support a broader sustainability agenda".

Credit: S&P Global Ratings

Meanwhile, S&P Global Ratings also announced yesterday plans to boost its ESG assessment of many of the companies in its ratings database, having started to include ESG sections within its issuer credit rating reports on corporates.

As a result, it said it expects to incorporate ESG sections in approximately 2,000 credits through the course of 2019 - including in the oil, gas and utilities sectors - representing around 40 per cent of all of the firm's corporate ratings.

It coincided with the publication of a new report from the UN Principles for Responsible Investment (PRI)'s yesterday, which recommended that credit rating agencies explicitly signpost credit-relevant ESG risks and opportunities in rating reports.

Michael Wilkins, managing director and head of sustainable finance at S&P Global Ratings, said the fixed-income market's heightened focus on ESG had "only emerged recently".

"However, ESG has been at the heart of our ratings approach for many years," he added. "We have long incorporated ESG considerations into our credit analysis. What we aim to do now is to more clearly underline to industry bodies, investors, and stakeholders how we do so."