#Rate it green driver

and European markets most of the time, Lee said.Īsia-Pacific, the biggest growth region for green debt in 2021, sold $30.63 billion green bonds in the first quarter, down from $34.23 billion in the same period last year, CBI data shows. Asian investors usually consume bonds issued out of the region and the supply is not enough to leak into the U.S. In the Asia-Pacific region, demand outweighs supply for green bonds, said Clifford Lee, DBS Bank's global head of fixed income. Markets 360 is BNP Paribas' market strategy and economics division.

#Rate it green driver

'Europe has been the key driver in development and the growth of the green bond market, and we do not see that changing in 2022,' said Trevor Allen, head of sustainability research at Markets 360, BNP Paribas Corporate and Institutional Banking. Still, analysts expect Europe to remain the key region driving growth of the green bond market globally. Green bonds, at $532 billion in 2021, were up 87%. In 2021, $92 billion of sustainability-linked bonds were issued, marking a 989% increase over the previous year, according to Ratings. S&P Global Ratings expects sustainability-linked bonds to be the fastest-growing subset of environmental, social and governance bonds. 'The growth of sustainable debt issuance is broad-based, but France, Germany and Italy have led the way in 2022,' Sam Morton, head of European investment-grade research at Invesco Fixed Income, told S&P Global Market Intelligence.Ĭorporate sustainable debt issuance, which is expected to rise in 2022, will be driven by increased supply of sustainability-linked bonds, Morton said. Unlike traditional green bonds, these are not ring-fenced for specific environmental or social projects, thus providing more flexibility for issuers. Germany and France led, with $15.9 billion and $7.6 billion of green bond issuances, respectively.Īs green bond issuance starts to decline, European issuers have started preferring sustainability-linked bonds, analysts said. Interest rates are set to firm up after unprecedented easing by many central banks to support economies battered by the pandemic.Įurope, the highest-contributing region to green debt globally, sold $45.8 billion of green bonds in the first quarter, down from $60.16 billion in the year-ago period, CBI data shows. Uncertainty over the global economic outlook due to rising inflationary pressures and the impact of Russia's invasion of Ukraine have affected funding for energy transition projects. The weak first quarter ended a multiyear growth streak for the global green bond market, propelled by net-zero commitments from many countries.

Another $21.29 billion of green bonds issued globally in the first quarter of 2022 were reported by CBI as non-aligned, while $28.26 billion have not yet been categorized. The data covers bonds aligned with CBI definitions. The issuance of green bonds globally in the three months ended March 31 fell 34.63% year over year to $83.8 billion, according to Climate Bonds Initiative, or CBI. 'The rising-rate environment impairs bond returns and primary issuance, and because the higher credit quality of the green bond market renders it very sensitive to changes in interest rates, the green bond market is down,' said Mitch Reznick, head of sustainable fixed income for Federated Hermes, an investment manager. The global green bond market faces a lull, as rising interest rates sidelined issuers and investors in the first quarter of 2022.Īs most central banks hike interest rates to tame inflationary pressures, financing costs for green bond issuers have increased and created uncertainties for investors, analysts said. Source: Jonathan Nafzger via Getty Images Funding for energy transition projects faced a lull in the first quarter of 2022.