Credit ratings, research, and risk analysis provider Moody’s Investors Service released its quarterly sustainable finance update today, raising its forecast for 2021 green, social and sustainability bond issuance to a record-shattering $850 billion, as volumes continue to surge.
According to the report from Moody’s global sustainable bond issuance reached $189 billion in Q2 2021, increasing 66% over the prior year quarter, driven by 48% growth in green bonds to $94 billion, 59% growth in social bonds to $46 billion, and more than 150% growth in sustainability bonds to $49 billion. Issuance pulled back slightly from the record $238 billion set in Q1 2021.
Matthew Kuchtyak, Assistant Vice President-Analyst at Moody’s, said:
“Following record first-half issuance, we now forecast about $450 billion of green bonds and $200 billion each of social bonds and sustainability bonds this year. We still expect sustainable bonds to account for around 8%-10% of global debt issuance in 2021, as issuers across all segments of the market continue to explore how they can link their capital markets activities with their sustainability objectives.”
Moody’s $850 billion sustainable bond issuance forecast marks a significant jump over its prior estimate of $650 billion, and would see issuance increase 59% over last year’s record $533 billion. Moody’s expects sustainable bonds to account for 8% – 10% of total global debt issuance this year.
The report also noted continued growth in the sustainability-linked debt market, an emerging form of financing that ties the cost of capital to the issuer’s performance on specified sustainability metrics. Sustainability-linked loans and bonds each achieved record levels in Q2, with loan volumes reaching $156 billion, up 54% over the prior quarter, and bonds surging to $31 billion, more than triple the volume in Q1.