Despite the slower Q3 performance, Moody’s Investor Services maintained its full year 2023 sustainable bond issuance forecast of $950 billion.
This represents 4% growth over the prior year, according to the credit and research agency’s latest sustainable finance quarterly report.
It highlighted an anticipated return to growth in the fourth quarter, driven in part by COP28-related initiatives such as the conclusion of the first global stocktake to assess Paris Agreement progress and increased focus on nature/biodiversity.
The report notes that these areas may support activity in areas including sovereign issuance, transition finance, emerging markets activity, and adaptation-focused sustainable bonds.
The Q3 results were disapppointing though. ‘Global issuance of green, social, sustainability and sustainability-linked (GSSS) bonds totalled $198bn in the third quarter of 2023, down 26% from the previous quarter and down 13% from the same period in 2022,’ the report said.
As for segments, green bonds accounted for most of the drop in GSSS issuance in Q3, sliding 37% to $100 billion, after a record setting first half of the year.
However, Moody’s expects its full year forecast of a 10% rise in green bond issuance over 2022 to hold.
Social bond volumes fell 29% to $42 billion in Q3 after a strong Q2, while sustainability bonds dropped by a more modest 13% to $37 billion.
The report said that sustainable bond volumes totalled $731 billion for the first nine months of the year, which was 1% higher than the same period last year.
The record annual high was $1.1tn in 2021, while $911bn was issued in 2022.
Tthe report said Q3 also saw a continued divergence in regional GSSS trends, with Europe leading the way, accounting for 19% of total bond issuance year-to-date, compared to only 4.5% in North America.
Sustainable bond shares in the Middle East/Africa and Latin America/Caribbean have moved higher in 2023. The former increased to 29% in the first nine months of the year compared with 12% for the whole of 2022.
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