Sustainable debt issuance could exceed $1 trillion in 2022
This analysis is by Bloomberg Intelligence Senior ESG Analyst Christopher Ratti. It appeared first on the Bloomberg Terminal.
Global sustainable-debt issuance exceeded $700 billion in 1H and could exceed $1 trillion for the full year, we believe. While that would be one of the strongest years on record as companies use sustainable debt financing to achieve ESG-related goals, rising interest rates and a slowdown from the torrid pace of 2H21 mean that full-year 2022 is likely to come in lower than 2021.
Sustainable debt issuance remains resilient
Issuance in sustainable debt markets has been resilient so far this year, surpassing all other full year issuance except for 2020 and 2021. Green and sustainability bonds are only slightly lower than this point last year, while social bonds are the largest detractor with issuance 61% lower year-to-date as pandemic funding needs have mitigated.
Sustainable debt issuance
Year-to-date issuance of green bonds
Issuance of green bonds year-to-date has surpassed all other full-year issuance except 2021, with $269.6 billion issued as of June 30. The diverse issuance, with 11 sectors represented, is dominated by governments including supranational, financials and utilities, which remain the top three sectors for green bond issuance, accounting for 86% of issuance YTD. Green issuance may still approach $500 billion for the full year, as it remains the largest sustainable-debt issuance type.
Green bond issuance
Declining social bond issuance
Social bonds have been the laggard in sustainable-debt issuance, down 61% vs. 1H21. The new social bonds have come from nine different sectors but continue to be dominated by governments including supranational and financials. These two sectors account for 90% of total social bond issuance year-to-date.
Year-to-date social bond issuance
Sustainability bond issuance is slightly lower YTD
Sustainability bond issuance in 1H was $81.4 billion, down slightly from the year-earlier period, but still ahead of most other years. Full-year issuance should exceed 2020 but fall short of record issuance in 2021. Like green bonds, the sustainability bond issuance has come from 11 sectors, but is dominated by governments, including supranational, financials and utilities, with those sectors responsible for 92% of issuance year-to-date.
Sustainability bond issuance
Issuance of sustainability-linked bonds is likely to fall short
Primary issuance for sustainability-linked bonds through 1H has slightly exceeded the same period in 2021, but most likely won’t be able to keep pace. That’s because 2H21 issuance was 78% higher vs. 1H21. It would be difficult for a repeat as higher rates, increased volatility and inflationary pressures disrupt primary markets.
Sustainability-linked bond issuance