Green bonds are propelling the worldwide ESG debt market, according to analysis by Bloomberg Intelligence, writes Laura Miller.
The resilience of the green bond market in the first nine months of the year saw issuance exceed $505bn – or 48% of total sustainable issuance – up 8% on the same period last year.
Social bond issuance has also crept higher this year, up 2% compared with 2022.
Total sustainable issuance is down 16% so far in 2023, however, in line with other security types.
Total issuance for the month of September was down 18% from a year earlier, while the total for the third quarter of the year was $255bn, down 32% from a year earlier
The euro increased to 34% of sustainable debt issuance in September after a weaker July and August.
The euro was also the preferred currency during the first nine months of 2023, with more than $400bn dollar-equivalent, accounting for 38% of the total.
The dollar is in second place for the year at 30%, with $312bn. However this is down roughly 6% from a year ago.
Yuan increased on a year-to-date basis, with 8% of total issuance, up from 6% a year ago.
Euro is major issuing currency
Christopher Ratti, senior ESG analyst at Bloomberg Intelligence, said: “We continue to expect the euro to be the major issuing currency, as government support appears to be less fractured when it comes to environmental, social and governance issues.”
The world’s largest sustainable debt issuers used a variety of security types in the third quarter, Bloomberg Intelligence found, with five different types among the top 10.
This variety was “a positive sign for the sustainable debt market”, according to Bloomberg Intelligence.
International Bank for Reconstruction and Development was the largest issuer in the third quarter of this year.
It issued more than $13bn dollar-equivalent of debt using sustainability and green bonds across seven different currencies, coming to market every month in 2023.
The UK was the third largest issuer from July to September, selling $6.2bn of green bonds.
Remaining issuance in the top 10 included sustainability-linked and green loans, along with social and green bonds.
Government issuance on rise
Governments, including supranationals, are the only sector so far this year that has increased its issuance, compared to 2022, up 13% to $363bn of global sustainable debt issuance.
However quarterly issuance fell 30% for the sector versus the third quarter in 2022.
The next highest sector in issuance was financials, adding $242bn year-to-date through September, though this is down 21% compared to the first nine months of 2022.
Healthcare remains the weakest sector, with only $6.35bn issuance so far in 2023, down more than 51% on the same period a year ago.