The global issuance of green, social, sustainability and sustainability-linked (GSSS) bonds fell 13% YoY to USD215bn in 3Q22 amid a challenging macroeconomic and geopolitical environment, while the share of GSSS bonds in the global bond market hit a record high of 16%, as reported by ESG Today on November 7. In the first nine months of 2022, GSSS issuance declined by 17% YoY to USD679bn, outshining the global bond market, which shrunk by 27%. The numbers came from research by Moody’s Investors Service [MCO:US]. Given the weaker financial market, Moody’s forecasted that the full-year GSSS volume would be around USD900bn, down from its previous prediction of USD1tr. However, the research firm expected GSSS bonds to continue growing when market conditions improve. 

The pullback in GSSS volume can be attributed to the shrunk bond market in Europe and North America, where GSSS bond issuance respectively witnessed an 18% and 11% decline in the first three quarters due to the economic recession caused by the Russian invasion of Ukraine. In addition, the market is cooling down due to growing market scrutiny on the credibility and robustness of issuers’ sustainability-linked bonds (SLBs) target. In 3Q22, global SLBs issuance slumped to USD8bn from USD20bn in the previous quarter. In contrast, the GSSS volume in the Asia-Pacific region rose 15% YoY to USD159bn in the first three quarters, accounting for 21% of the global GSSS bond supply. According to Moody’s, GSSS bonds would diversify and keep growing as issuers from emerging markets seek to finance a wider range of environmental and social projects.

Sources:

https://www.esgtoday.com/sustainable-bonds-hit-record-share-of-global-bond-issuance-moodys/

https://www.businesstimes.com.sg/companies-markets/volume-of-esg-bond-issuances-declines-13-to-us215b-in-q3-2022-moodys-report

https://assets.website-files.com/5df9172583d7eec04960799a/62e19ce6e0fd36ad00e6429d_BX14169_MESG%20Sustainable%20Finance%20Quarterly%20Market.pdf

https://esg.moodys.io/insights-analysis-reports/emerging-market-sustainable-bond-outlook-remains-constructive-despite-market-headwinds