Green bond EM issuance up 34% in 2023

Amundi and IFC has published the sixth edition of the Emerging Market Green Bonds Report that finds green bonds issuance in emerging markets increased 34% to $135 billion in 2023.

The report also finds that global green, social, sustainability and sustainability-linked (GSSS) bonds issuance exceeded $1 trillion in 2023, matching the all-time high reached in 2021. GSSS accounted for 2.5% of global fixed income issuance in 2023, up from 2.2% a year earlier.

Growth in emerging market sustainable bonds issuance is set to continue through 2025, with Amundi forecasting 7.1% year over year growth for GSSS bonds and 7.5% growth for green bonds.

Other highlights from the 2023 report include:

• In 2023, China remained the largest green bonds issuer in emerging markets ($89.1 billion), growing by 18% year over year.

• In EMDEs outside China, GSSS bonds issuance was mainly driven by green bonds, which increased by 81%. In the Middle East and North Africa, most notably UAE and Saudi Arabia, green bonds issuances more than doubled.

• Excluding supranational issuers, green bonds penetration (issuance as a proportion of overall fixed income) reached 1.4% globally, an all-time high. Across regions, this was highest for emerging markets outside China (2.1%), and lowest for developed markets (1.3%).

• Non-financial corporates remained the largest green bonds issuers in developed markets (36% of the total), while financial institutions continued to dominate in emerging markets (58% of the total). Green bonds issuance by sovereigns grew strongly: 33% globally and 226% in emerging markets.

Susan Lund, Vice President, Economics and Private Sector Development, International Finance Corporation, said, “Financing sustainable projects in emerging market economies will require deeper capital markets to fund economic and energy transitions. To achieve these goals, substantial efforts must be made to ensure continued growth in the Global Green, Social, Sustainability and Sustainability-Linked bonds market, including enhancing regulations and standardizing best practices.”

Yerlan Syzdykov, Global Head of Emerging Markets at Amundi, said, “Over the medium term, we anticipate continued growth in green bonds issuance within emerging markets, driven by several factors: an acceleration of the energy transition, a competitive pricing advantage for issuers compared to developed markets, and favorable macroeconomic conditions, such as high nominal yields at a time of relatively slow growth, which typically favors fixed income over equities.”