This article was written by Caleb Mutua. It appeared first on the Bloomberg Terminal.
Global sustainable bond sales saw the second-busiest August ever, setting the stage for annual volume to approach the record levels seen in 2021.
New sales of green, social, sustainability and sustainability-linked bonds totaled $47.1 billion last month, compared with $69.5 billion in August 2022, the highest volume since the inception of the green debt market in 2007, according to data compiled by Bloomberg.
August usually sees new issuance for all kinds of debt taper off as the cyclical summer slowdown kicks in toward the end of the month. Borrowers are now rushing back to primary debt markets in the typical September supply spree, which could also boost sales of ESG bonds.
Sales of green bonds, the largest category of sustainable debt by amount, reached $327.3 billion in the first half of the year, Bloomberg-compiled data shows. That’s more than half of the record $600 billion that BNP Paribas SA is forecasting for the full year. The lender is this year’s biggest underwriter of green bonds globally, according to current Bloomberg rankings.
“September through November are usually strong months for green bonds,” said Anne van Riel, BNP’s head of sustainable finance capital markets for the Americas. “We think this will help offset the weaker summer period.”
Other market participants agree with the bullish outlook. S&P Global Ratings expects increased investor demand in key regions, issuers’ continued focus on the energy transition and supportive climate policies to also fuel ESG-bond sales in the second half of the year. Issuance of different types of ESG bonds could reach $900 billion to $1 trillion, approaching levels reached in 2021, when volume surpassed $1 trillion for the first time ever.
“Sovereigns in particular are set to have their largest year on record,” S&P analysts including Patrice Cochelin and Bryan Popoola wrote in a note on Tuesday.
Citigroup Inc., meanwhile, expects a string of potential investments linked to the Inflation Reduction Act — the US’s biggest financial commitment in history to fight climate change — to likely boost sustainable bonds going into year-end and next year.
Bloomberg
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