Global sustainable bond issuance is set to exceed $1.5 trillion in 2022, with sustainability-linked bonds expected to be the fastest-growing market segment, according to an S&P Global report.
S&P Global Ratings has forecast a record year for green bond issuance volumes this year in its report, citing commitments from some countries at COP26 to increase their emissions reduction targets.
The ratings agency said in its report that while sustainable bonds remain a “relatively small part” of global bond issuance, this is increasing rapidly, to 11% of global issuance in 2021, up from less than 5% three years prior.
In 2022, S&P Global Ratings predicted this share will grow to approximately 17% of total 2022 issuance, despite the backdrop of “stagnating” global issuance volumes.
The report found that US-based issuers are expected to lead green bond issuance in 2022, alongside the EU, following the introduction of President Biden’s Bipartisan Infrastructure Law and proposed Build Back Better Framework which, combined, represent a more than $500 billion investment in green projects.
S&P Global Ratings also forecast sustained growth of the other categories of instruments, including social and sustainability bonds, as they diversify into new projects supporting the 2030 Sustainable Development Goals (SDG) agenda.
“Growth in these markets will be a result of significant investor demand, regulatory developments to help standardize the market, and issuers' desire to diversify their investor base and potentially obtain favorable pricing terms,” S&P Global Ratings said in its report.
Earlier this year, Bloomberg Intelligence revealed that global ESG assets may surpass $41 trillion by 2022 and $50 trillion by 2025, with the US set to take the lead.
In January, S&P Global acquired The Climate Service in a deal that means it will be able to offer its clients more “robust and comprehensive” climate data, models and analytics.
It followed the launch in April 2021 of S&P Global Sustainable1, which S&P Global calls its “single source of essential sustainability intelligence”.
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