Green bond issuance in emerging markets up by 34% in 2023

Green bond issuances in emerging markets and developing economies surged by 34% in 2023, reaching $135 billion, according to European asset manager Amundi’s data.

The Amundi report attributed this growth to broadly favorable financial market conditions, characterised by lower inflation expectations, which spurred a rebound in sustainable finance across these regions. The broader category of global green, social, sustainability and Sustainability-Linked (GSSS) bonds also saw a record issuance of over $1 trillion in 2023, matching the all-time high of 2021.

This increase elevated GSSS bonds’ share to 2.5% of global fixed income issuance, up from 2.2% the previous year, driven by heightened governmental and corporate efforts to tackle climate challenges in developing regions.

The greener, the better

Amundi predicted continued growth in the sustainable bonds market, projecting a 7.1% year-over-year increase for GSSS bonds and a 7.5% rise for green bonds through 2025. This optimistic outlook hinges on a stable global environment with easing inflation and minimal geopolitical disruptions, said the researchers.

The report also highlighted initiatives in 2023 aimed at bolstering the GSSS bonds market, such as new taxonomies in the ASEAN region, Latin America and the Caribbean and Singapore. Additionally, it highlighted that initiatives focused on reversing biodiversity loss have been pivotal in driving market growth.

Global issuance of GSSS bonds rebounded in 2023, increasing by 11% to reach $1 trillion, matching the all-time high of 2021. This growth was driven by a 15% rise in green bonds and a 45% increase in issuances from emerging markets. Within these markets, GSSS bond issuance grew by 45%, and by 65% in emerging markets and developing economies outside China. China’s GSSS bonds issuance rose by 28%, tempered by a strong 2022 and weaker domestic economic dynamics.
In 2023, China was the largest green bonds issuer in emerging markets, with $89.1 billion issued, growing by 18% year over year. Emerging markets and developing economies outside China saw an 81% increase in green bonds, with notable growth in the Middle East and North Africa, especially in the UAE and Saudi Arabia.

A growing universe of emerging market debt

Globally, green bonds’ penetration reached an all-time high of 1.4%, with the highest rates in emerging markets outside China at 2.1%. Non-financial corporates were the largest green bond issuers in developed markets, while financial institutions dominated in emerging markets.
Sovereign green bond issuance grew significantly, by 33% globally and 226% in emerging markets. The largest share of funds raised from green instruments in emerging markets and developing economies was allocated to renewables, followed by green buildings.

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