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Global issuance of sustainable bonds decline 26% q-o-q in 3Q2023, except in Asia-Pacific which grew by 1%

The decline in global issuance of sustainable bonds is not isolated, with global bond markets facing 22% drop q-o-q.

The global issuance of green, social, sustainability and sustainability linked bonds declined this third quarter, except for the Asia-Pacific region, where issuance grew by a modest 1%, according to a report by Moody’s on Oct 30.

A result of the increase in absolute volumes in the region, Asia-Pacific issuance surged to a strong 28% of global sustainable bonds, the highest share of market for the region since the fourth quarter of 2018.

Moody’s found that more than 60% of global social bond issuance during the third quarter of 2023 originated from Asia-Pacific issuers, which accounted for US$25 billion ($34.18 billion), 38% of which is from the Korea Housing Finance Corporation.

The global sustainable issuance of bonds totaled US$198 billion in the third quarter of 2023, a 26% q-o-q decline, in which there were US$100 billion of green bonds, US$42 billion of social bonds, US$37 billion of sustainability bonds and US$19 billion of sustainability-linked bonds.

This decline in the issuance of sustainable bonds was not isolated, with the global bond market experiencing a 22% decline in the third quarter, according to Dealogic. Despite the decline in third quarter issuance, volumes remain on track to achieve Moody’s forecast of US$950 billion for the full year 2023, following a relatively strong first half of the year.

More broadly, sustainable bond issuance represented a 14% share of the global bond issuance this quarter, down 15% from the previous quarter. However, this was up 13% y-o-y.

Ahead of the upcoming COP28 conference in Dubai held in November, Moody’s anticipates that rest-of-year sustainable bond issuance will be supported. The conference will discuss priorities such as the conclusion of the first global stocktake to assess Paris Agreement progress, as well as increased focus on nature and biodiversity.

Looking forward, Moody’s expects a rising focus on nature and biodiversity risks, which will support the diversification of sustainable bond proceeds over time. It notes that third quarter developments, such as the Taskforce on Nature-related Financial Disclosures (TNFD) releasing its final recommendations for nature-related risk management and disclosure – along with the recent publication of a guide for issuers financing projects related to the blue economy – will support continued momentum in this area.

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