Global sustainable debt set to top US$1 trillion: Moody’s

The issuance of green, social, and sustainable bonds is on track to top US$1 trillion in 2021, says Moody’s ESG Solutions.

In a new report, the company said sustainable bond issuance reached $217 billion (all figures in U.S. dollars) in the third quarter, down 21% from the second quarter but up 25% from the third quarter in 2020.

Green bonds led the way with $115 billion in new issuance, along with $29 billion of social bonds, $52 billion of sustainability bonds and $21 billion of sustainability-linked bonds, Moody’s reported.

Through the first nine months of the year, total issuance was at $775 billion — almost double the $402 billion issued during the same period last year, and on pace for an annual total of over $1 trillion.

Moody’s expects the full-year total for green bonds to top $500 billion, with $200 billion in both social bonds and sustainability bonds, and $100 billion of sustainability-linked bonds. The company cited “heightened market focus on accelerating climate action and realizing sustainable development objectives” as being “likely to underpin sustained momentum into the fourth quarter.”

Looking ahead, Moody’s said it expects the enthusiasm for sustainable debt markets to continue in the wake of the pandemic, which “has catapulted social financing to the forefront of sustainable debt markets, a trend that is likely to endure long after the effects of the pandemic subside.”

“Beyond pandemic-related financing, we also see opportunities for proceeds innovation and diversification in the areas of social justice and equality, which continue to rise up the agenda for investors, businesses and governments,” the report said.

Further efforts to address global warming at COP26 “would further galvanize global sustainable debt markets,” Moody’s said, “particularly with respect to sovereign issuance, transition finance, emerging market activity and climate adaptation-focused green bonds.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.