Global issuance of green bonds down in 1Q 2022


Inflationary pressures, along with rising interest rates and heightened market volatility from the war between Russia and Ukraine caused a slowdown in global green bond issuance during the first three months of this year.

Global placements of green debt amounted to 83.8 billion dollars, a figure 34.63% below what was reported in the first quarter of 2021, according to data from the Climate Bond Initiative (CBI), an organization that promotes green financing in the world. , referred in a report S&P Global Market Intelligence.

“Uncertainty about the global economic outlook due to rising inflationary pressures and the impact of the Russian invasion of Ukraine have affected the financing of energy transition projects,” the report said.

It adds that the increase in interest rates sidelined issuers and investors in the first quarter of 2022, since as most central banks raise interest rates to reduce inflationary pressures, the costs financing for green bond issuers have increased and created uncertainty for investors.

Mitch Reznick, head of Sustainable Fixed Income at Federated Hermes, said that “the rising rate environment hurts bond yields and primary issuance, and because the higher credit quality of the green bond market makes it very sensitive to changes in interest rates, the green bond market has fallen”.

Europe led activity

By region, in Europe there was greater activity, with issues of 45.8 billion dollars in green bonds in the first quarter, although this amount is below the 60.16 billion dollars raised in the same period of 2021. The countries in the area that Top placements were Germany and France, with $15.9 billion and $7.6 billion, in that order.

The Asia-Pacific zone registered the sale of 30.63 billion dollars of green bonds in the first quarter, a figure that compares negatively with the 34.23 billion dollars issued in the same quarter of 2021, CBI data indicates.

China was the country that led the issuance of green bonds in the first quarter of this year, with an amount of 21.4 billion dollars, followed by Germany and France. The above despite the fact that the Asian country “is the only economy in the world that continues to promote greater relaxation, as growth slows, dragged down by a high number of Covid-19 infections”, indicated S&P Global.

While in the United States the issues reached 4,200 million dollars and in Mexico this type of placement was not registered, although the bond linked to the sustainability of Grupo Aeroportuario del Centro Norte (OMA) for 4,000 million pesos stood out in the period.

A Natixis report recalls that the issuance of green bonds has had an exponential upward trajectory, increasing by an average of 70% per year for the last five years until 2021. However, in the first quarter of 2022, the volume of issuance was reduced in double digits, but that does not mean the end of rapid growth.

“The double-digit drop in bond supply … shows that the market is not immune to factors such as the normalization of central bank policies and even the war in Ukraine that affected bond markets in as a whole”, Natixis stated in its report.

Green bonds are fixed income instruments issued by public and private organizations to finance socially responsible projects with the environment. They constitute an increasingly popular form of investment in sustainable assets in sectors such as energy efficiency, transport, waste management, water care, among others, defines Santander.

[email protected]



Leave a Comment