Investment information service and rating company Moody’s has raised its forecast for 2020 sustainable bond issuance to $325-$375 billion, above its prior forecast of as much as $325 billion. In May, Moody’s reduced its forecast from its prior estimate of $400 billion, following the COVID-19 outbreak.
The increased forecast was driven by substantial growth in the market for social and sustainability bond volumes in Q2 2020. Both social and sustainability bonds achieved record issuance levels in the quarter, reaching $33 billion and $19.1 billion, respectively. Increased volumes in the quarter were driven by issuers raising funds through labeled bonds to respond to the COVID-19 pandemic and to finance recovery efforts. Moody’s now estimates that social and sustainability bond volumes could reach $150 billion this year, up substantially from its prior $100 billion forecast.
The overall market for sustainable bonds recovered significantly from the first quarter, growing 65% Q/Q to a record $99.9 billion in the three months ended in June.
Moody’s maintained its forecast for green bond issuance at $175 billion-$225 billion for the full year, after volumes improved 26% Q/Q to $47.8 billion, but remained below prior-year levels of $66.6 billion. In May, Moody’s reduced its forecast for green bond issuance from its earlier estimate of $300 billion.
Matthew Kuchtyak, AVP-Analyst at Moody’s Investors Service, said:
“Combined social and sustainability bond volumes could now total $150 billion for the year as coronavirus pandemic response efforts and heightened awareness of social issues related to healthcare and inequality continue to support issuance. We maintain our green bond issuance forecast, revised in May, of $175 billion-$225 billion for 2020.”