Global sustainable bond issuance in 2023 is on track to reach or even eclipse an expected $950 billion despite a decline in the number of debut issuers, according to Moody’s Investors Service.
The first half of 2023 saw $526 billion of sustainable bond issuance, marking a 7% increase from the same period last year, according to a Moody’s note released Thursday. The ratings firm expects issuance to remain robust during the second half of the year, which may send volumes higher than its forecast of $950 billion for 2023.
However, a drop in the number of first-time sustainable bond issuers could constrain market growth in the future, according to Moody’s. Last year’s global average of 51 new issuers per month fell to 29 per month in the first half of 2023, the note shows.
“While some of the decline may be attributable to market conditions, other more secular factors could be holding back would-be debut issuers, including heightened scrutiny of potential greenwashing and an increasingly complex ESG regulatory and political landscape,” analysts including Matthew Kuchtyak wrote.
The sustainable debt space has continued to evolve in response to new pressures and considerations. In June, the International Capital Market Association updated its Sustainability-Linked Bond Principles to include accommodations for sovereign issuers and a broader range of social causes, and updated its Social Bond Principles to formalize best practices. The group also released its first update to the Climate Transition Finance Handbook, a guide for issuing climate-themed bonds, the Moody’s note points out.
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