Global issuance of green, social, sustainability and sustainability-linked bonds will reach a combined $1tr in 2021, almost double the amount of issuance across the formats last year, according to a recent report by Moody’s ESG Solutions.
The bulk of ESG supply in 2021 has come from green bonds, with $500bn of issuance expected by the end of the year, followed by $200bn each of social and sustainability bonds and $100bn of sustainability-linked bonds.
That would make this a record year for ESG bond issuance, 63% higher than the $614bn of bonds issued in 2020.
In the third quarter, global ESG bond issuance totalled $217bn, comprising $115bn of green bonds, $29bn of social bonds and $52bn of sustainability-linked bonds, taking total supply for the first three quarters of the year to $775bn — almost double the $402bn raised during the first nine months of 2020.
European issuers continued to dominate green bond issuance in the third quarter, accounting for 57% of total supply in this format, followed by issuers in North America (22%) and Asia-Pacific (19%).
Non-financial corporates represented the largest sector for green bonds in the third quarter with $48bn of issuance, followed by sovereigns (22%) - helped by the debut green bonds from Spain and the UK.
Social bond issuance in the third quarter dropped by 47% compared to the previous quarter, with the decline attributed to a lower volume of supply from some of the biggest social bond issuers in Cades and Unédic.
Total social bond issuance during the first three quarters of the year stood at $173bn – already ahead of the record $167bn issued during the whole of 2020.
Sustainability bond supply was 4% down from the previous quarter but 26% higher than the third quarter of 2020. Supranationals continued to be the leading issuers of sustainability bonds in the third quarter, accounting for 40% of supply. However, Mexico and Benin provided two notable sovereign transactions in the third quarter.
The $62bn of Sustainability-linked bond supply during the first nine months of the year is also almost seven times higher than the $9bn issued during the whole of 2020.
