(Credit: Pixabay)Moody's increased its green bond forecast to $250 billion for the full year. The bond rating company forecasts total sustainable bond issuance could now approach $425 billion in 2020
Global issuance of green, social and sustainability bonds — or sustainable bonds, collectively — totaled a record $127.3 billion in the third quarter of 2020, a 30% increase over the previous high set last quarter, Moody's Investors Service says in a new report.
"Global sustainable finance volumes will approach $425 billion in 2020 after a strong third quarter," says Matthew Kuchtyak, AVP-Analyst in Moody's Investors Service's ESG Group. "We now forecast around $250 billion of green bonds, $100 billion of social bonds and $75 billion of sustainability bonds for the full year."
Sustainable bonds accounted for a 6.1% share of global debt issuance in the third quarter, also a new quarterly record. Sustainable bond issuance amounted to $288.2 billion through the first nine months of the year, 24% higher than the same period of 2019.
Green bond issuance jumped 31% from the second quarter to $72.3 billion globally in the third quarter as economic conditions somewhat improved. Green debt types are evolving, with green capital instruments and green sukuk emerging as areas to watch, says Kuchtyak.
Record issuance of both social and sustainability bonds for the second consecutive quarter, at $28.1 billion and $26.9 billion respectively, also drove the overall sustainable bond issuance record. While issuers continued to primarily use these labeled bonds to finance their coronavirus pandemic response efforts, a growing number of companies employed such instruments to showcase their broader sustainability goals, suggesting continued growth of sustainable bonds beyond the pandemic.
Sovereign sustainable bond issuance in particular continues to grow as countries respond to investor demand and raise capital for sustainable development activities, says Moody's. Following several debut issuances in the third quarter, sovereign sustainable volumes stand at $33.1 billion year-to-date, up from $21.8 billion for all of 2019.
