Green bond issuance rebounds in Q1: Moody’s

Global issuance of sustainable bonds rebounded in the first quarter, setting the stage for a solid year of new issue activity, says Moody’s Investors Service.

In a May 1 report, the rating agency said global issuance rose by 36% in the first quarter to $281 billion. (All figures in U.S. dollars.)

Total issuance was up from $207 billion in the fourth quarter, and more or less in line with the same quarter a year ago. 

The green-bond segment led the way with $169 billion worth of new issue activity, followed by $55 billion of sustainability bonds, $48 billion in social bonds, and $10 billion of sustainability-linked bonds. 

“Despite the strength of first-quarter sustainable bond volumes, we are maintaining our full-year 2024 sustainable bond issuance forecast of $950 billion as global macroeconomic conditions remain relatively soft,” Moody’s said in the report. 

Despite economic uncertainty, policy support for the transition to a lower-carbon economy is growing, the report noted.

“The proliferation of green industrial policies, as well as growing regulatory pressure on companies to decarbonize, is starting to reshape both investment strategies and carbon transition risks for issuers in some hard-to-abate sectors,” it said. 

The improving cost competitiveness of green technologies is also driving investment and underpinning sustainable bond issuance, Moody’s said.  

“Sustainable bond issuance from the most exposed sectors has totalled $845 billion since 2018, with $53 billion in the first quarter of the year accounting for a 19% share of global issuance,” it said. 

At the same time, governments are increasingly using green bonds to finance their own sustainable investments. 

“Sovereign sustainable bond issuance totalled $59 billion in the first quarter, the segment’s third-highest quarterly tally to date,” Moody’s said. “Sovereign volumes will likely continue to increase over time as more countries finance their climate and sustainable investment goals with labelled bonds.” 

The proliferation of green disclosure standards is supporting new issue activity as well, the report noted. 

“While the scope and detail of disclosures vary by jurisdiction, greater standardized requirements and reporting transparency will help improve industry practices in the sustainable bond markets, such as the increasing use of third-party audits for sustainable bond reporting,” it said.