Sustainable bond market sees Q3 dip but eyes robust $950bn EoY finish


Issuance volumes of GSSS bonds in Q3 2023 experienced a significant reduction, dropping by 26% year-over-year to $198bn.

According to ESG Today, Moody’s anticipates the full year 2023 GSSS issuance to reach a formidable $950bn, marking a 4% increase from the previous year. The expectation of a rebound in Q4 is partly credited to initiatives related to COP28.

During the first nine months of 2023, sustainable bonds accounted for 14% of the global bond market, a marginal increase from 13% during the same period in 2022.

The marked Q3 decline was largely influenced by a reduction in sovereign issuers’ contribution, plummeting by 62% to only $23bn.

Distinct regional disparities were evident, as Europe’s sustainable bond volumes made up 19% of its total bond issuance, in contrast to North America’s modest 4.5%.

Green bonds, having had a stellar first half of the year, witnessed a 37% reduction in Q3, descending to $100bn. Despite this, Moody’s retains its full-year forecast for green bonds at $550bn.

Social bonds fell by 29% to $42bn in Q3, whereas sustainability bonds saw a 13% decline to $37bn. On a positive note, Sustainability-linked bonds (SLB) surged by 73% to $19bn.

COP28’s climate change conference is projected to bolster the GSSS market towards the year-end, with a focus on areas such as sovereign issuance, transition finance, emerging market activity, and adaptation-focused sustainable bonds.

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