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This article was written by Jonathan Gardiner, Sustainable Indices Product Manager, and Tom Freke, Fixed Income Data Specialist at Bloomberg.
Sustainable bond issuance topped more than a trillion dollars in 2023, bolstered by record levels of green bond sales, data compiled by Bloomberg show. Issuance of impact bonds (i.e., green, social, sustainability and sustainability-linked) totalled $939 billion in 2023, up 3% on the same period last year. It’s not a record – that was 2021 when issuance reached $1.1 trillion.
One area where records were set in 2023 was green bond sales from corporates and governments, which climbed to $575 billion, a step up from 2022 and just beating 2021’s $573 billion figure.
The largest green bond sale of the year was from the Italian government, in April, which totaled €10 billion. And the biggest sector for impact bonds was governments. Other European government issuers of green bonds included France, Germany, Ireland, the Netherlands and the United Kingdom. A total of $190 billion of green bonds were issued by governments throughout 2023.
Social bond sales in 2023 roughly matched those of the previous year, at $135 billion. That’s some way short of the record issuance volumes during the pandemic, when $220 billion of social bonds were issued in 2021. The largest social bond of the year was issued by La Caisse d’amortissement de la dette sociale (CADES), owned by the French government, at €5 billion.
Sustainability bond sales in 2023 dropped slightly compared to that of the previous year, down 1.6% to $161 billion. The International Bank of Reconstruction & Development (IBRD) was responsible for the largest sustainability bonds issued in 2023, at $5 billion. The development bank was the largest issuer of sustainability bonds throughout the year, with nearly $50 billion in sales.
Sustainability-linked bonds (SLBs) saw the largest decrease in issuance volumes in 2023, down 22% from the previous year, with $68 billion. The Canadian energy company, Enbridge, was responsible for the largest sustainability-linked bond of the year, at $2.3 billion, issued in March.
However, despite the downturn in the SLB market, 2024 has already seen Enel, the Italian utility, issue a $1.75 billion sustainability-linked security. Maybe this an early indicator of a rebound in the market. And transition bonds may well be a popular theme in the coming year, with Japan planning a significant ramp up in transition bond issuance over the next 10 years.
Bloomberg’s Global Aggregate Green, Social and Sustainability (GSS) bond indices (webinar link) may provide investors with an objective and robust measure of the global market for fixed income securities issued to fund projects with direct environmental and/or social benefits. The 2023 return for the GSS index is 9.94%, some 423 bps above that of the Global Agg Index, highlighting increased returns for investors with an appetite for sustainability-focused investment.
For additional insights on the sustainable debt market, please follow this link.
Visit IN ESG<GO> on the Terminal or browse our website to find out more about Bloomberg’s Sustainable Indices and request a consultation with an index specialist.
The data and other information included in this publication is for illustrative purposes only, available “as is”, non-binding and constitutes the provision of factual information, rather than financial product advice. BLOOMBERG and BLOOMBERG INDICES (the “Indices”) are trademarks or service marks of Bloomberg Finance L.P. (“BFLP”). BFLP and its affiliates, including BISL, the administrator of the Indices, or their licensors own all proprietary rights in the Indices. Bloomberg L.P. (“BLP”) or one of its subsidiaries provides BFLP, BISL and its subsidiaries with global marketing and operational support and service.
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