LONDON, April 20 (Reuters) - Moody's Investors Service has reduced its estimate of global green bond issues this year to nearly $120 billion from a forecast in January of $200 billion as the number of transactions and Chinese and development bank issuance declined.
In the first quarter issuance of such bonds, used to raise funds for projects seen as helping tackle environmental problems, amounted to $29.5 billion, the market's second largest quarterly volume to date and 75 percent higher than the first quarter last year.
However, Chinese issuance dropped by over two thirds, the number of total transactions fell and issuance by development banks trailed off, Moody's said in a report published on Thursday.
"If the current trend continues, green bond issuance will total nearly $120 billion for the year and eclipse the record of $93.4 billion in 2016," said Henry Shilling, Moody's senior vice president and author of the report.
"This rate of growth, however, is lower than the increase of 120 percent from 2015 to 2016 that would push volume to $206 billion," he added.
In January the ratings service forecast global issuance would cross the $200 billion mark this year.
However, HSBC also predicted in January that the growth in green bond issuance could slow this year to $90-120 billion, while Swedish banking group SEB said last month that issuance could amount to $125-150 billion. (Reporting by Nina Chestney; Editing by Greg Mahlich)