Success for Democratic candidate Joe Biden in the U.S. presidential election next month could be a boon for the country's green bond market.
The global green bond market is currently dominated by euro-denominated debt, at around 60%, with most of the remainder made up of U.S. dollar-denominated debt.
However, a win for Mr. Biden on Nov. 3 could change that and bring more balance, money managers said.
Mr. Biden's $2 trillion climate-related plan could be a "game changer" for the green bond market, said Johann Ple, Paris-based portfolio manager at AXA Investment Managers.
His pledge to rejoin the Paris Agreement on climate change if elected is also potentially a huge positive for the green bonds market.
"The significant funding needed to meet this commitment could be done via green bonds," said Lukas Herrmann, assistant vice president-fixed income, portfolio manager and buyside analyst at DWS Group in Frankfurt.
"However, in terms of actual policies, Biden's proposals are a hodgepodge of ideas by various interest groups from within his party. For them to become law, Democrats would need to win a majority in the Senate," Mr. Herrmann said.
A lot also rides on whom Mr. Biden chooses for key appointments, Mr. Herrmann said. "As a result, it is probably a bit too early to tell how much of a boon a Biden victory would be for the green bond market on a global basis."
And Mitch Reznick, London-based head of sustainable fixed income at the international business of Federated Hermes Inc., said the outlook for the sustainable bonds market is "bright no matter the results of the U.S. presidential elections because as the effects of climate change become more visceral to all of us, asset owners and retail investors are increasingly hip to the idea that we can simultaneously fight the climate crisis and create economic value and growth at the same time."
