Sustainable Bonds to Remain Steady in 2024

Sustainable bond issuance will hold strong this year and is anticipated to reach US$950 million according to a report from Moody’s. A meaningful fall from the US$946 billion in bonds recorded last year is not anticipated, despite high interest rates and slowing economic growth. Moody’s forecast comprises US$580 billion of green bonds, US$150 billion of social bonds, US$160 billion of sustainability bonds and US$60 billion of sustainability-linked bonds (SLBs). However, the report suggested SLBs would likely face heightened market and investor scrutiny over quality, with an expected decline in volumes both in absolute terms and as a share of total sustainable bond issuance. The report projected that investment in emerging green technologies would accelerate as transition finance continues to grow in prominence. It also noted growing policy support for green hydrogen, biofuels, battery storage, as well as carbon capture utilisation and storage – all of which has helped to drive an increase in private and public investment and could improve cost competitiveness. Moody’s flagged that the climate finance gap would spur new funding approaches in emerging markets, with a gradual shift from voluntary to regulatory standards globally.

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