How big is the green bond market in 2023?
Sustainable bond issuance topped more than a trillion dollars in 2023, bolstered by record levels of green bond sales, data compiled by Bloomberg show. Issuance of impact bonds (i.e., green, social, sustainability and sustainability-linked) totalled $939 billion in 2023, up 3% on the same period last year.
Over the last decade, green bonds issuance has increased exponentially, reaching a value of nearly 500 billion U.S. dollars worldwide in 2022 alone and becoming a key instrument to hedge climate change.
Global green bond issuance will likely gain further momentum in 2024, with interest rates in the US and Europe expected to fall, creating favorable debt market conditions for investors and issuers alike.
Green bonds are propelling the worldwide ESG debt market, according to analysis by Bloomberg Intelligence, with issuance up 8% so far in 2023 on last year. The resilience of the green bond market in the first nine months of the year saw issuance exceed $505bn, or 48% of total sustainable issuance.
Despite stagnating global bond issuance, we anticipate that green, social, sustainable, and sustainability-linked bond (GSSSB) issuance should be in line with our forecast of $900 billion to $1 trillion, or 14% to 16% of total issuance, in 2023.
EU leads on green bonds; Emerging nations may bring next wave. Western Europe has 50% of the global green-bond market, and China's 15% share pushed it past the U.S. But debuts by emerging nations (excluding China) are pointing to a profound shift.
China produced the largest volume of green bonds (USD85. 4bn), while France owned social bonds (USD54. 5bn). The Dominican Republic was the only country to join the green bond market in 2022.
The United States 10 Years Government Bond Yield is expected to be 3.654% by the end of June 2024. Video Player is loading. It would mean a decrease of 49.6 bp, if compared to last quotation (4.15%, last update 6 Mar 2024 6:15 GMT+0).
The United States 20 Years Government Bond Yield is expected to be 3.777% by the end of June 2024. It would mean a decrease of 59.4 bp, if compared to last quotation (4.371%, last update 7 Mar 2024 18:15 GMT+0).
Fixed-Income securities are debt instruments that pay a fixed amount of interest, in the form of coupon payments, to investors. The interest payments are commonly distributed semiannually, and the principal is returned to the investor at maturity. Bonds are the most common form of fixed-income securities.
How big is the ESG market in 2023?
The global ESG (environmental, social, and governance) & sustainability advisory market is poised to reach a valuation of US$ 39.3 billion in 2023.
The yield on the 10-year U.S. Treasury note, which began 2023 at 3.84%, fell from 5% in mid-October to back under 4% by mid-December. The Bloomberg U.S. Aggregate Index returned 9.29% between October 19 and December 31; investors who stood safely in cash may have felt that they missed out.
The Morningstar Emerging Markets Composite Bond Index gained 9% in 2023, though the bulk of that performance came during the last quarter, mostly due to declining inflation rates and a weakening dollar. Some top developing-markets managers enjoyed continued success in 2023.
The green bond market continues to grow rapidly, according to the World Economic Forum's report, Fostering Effective Energy Transition 2023, which noted $270 billion worth of issuances in 2020.
Green bonds can help investors put their money where their values are. Much like investing in environmental, social and governance, or ESG, investments, green bonds have a mission built into the investment itself. Green bonds can also have tax incentives in the form of tax exemption and tax credits.
Green bonds and other thematic bonds are gaining popularity. These bonds stand out due to their intentional focus beyond traditional credit principles. Investors are increasingly interested in how bond issuers use proceeds for risk reduction and improved outcomes, not just credit standards.
Today, more than 50 countries have issued green bonds, with the United States being the largest source of green bond issuances.
Annual issuance in 2021 reached a record high of USD68. 2bn (RMB440. 1bn), up 186% year-on-year (See figure 1). China ranked as the second largest green bond market in the world on both accounts (See figure 2).
Green bonds work just like any other corporate or government bond. Borrowers issue these securities to secure financing for projects that will have a positive environmental impact, such as ecosystem restoration or reducing pollution. Investors who purchase these bonds can expect to make a profit as the bond matures.
A wide range of companies including Apple, Unilever, and Bank of America have issued green bonds in recent years, and the trend is likely to continue. Despite this boom, little is known about the impact of these bonds. Have they delivered positive environmental results?
Why do investors like green bonds?
Green bonds provide a means for investors to help issuers fund projects that put the world on a long-term path towards a zero-carbon economy. The investment opportunity provides some intended financial return for the investor, but it also creates another dimension of return.
The World Bank Green Bond raises funds from fixed income investors to support World Bank lending for eligible projects that seek to mitigate climate change or help affected people adapt to it.
Key Takeaways. Most bonds pay a fixed interest rate that becomes more attractive if interest rates fall, driving up demand and the price of the bond. Conversely, if interest rates rise, investors will no longer prefer the lower fixed interest rate paid by a bond, resulting in a decline in its price.
US 10 Year Note Bond Yield was 4.11 percent on Wednesday March 6, according to over-the-counter interbank yield quotes for this government bond maturity. Historically, the US 10 Year Treasury Bond Note Yield reached an all time high of 15.82 in September of 1981.
Interest from corporate bonds and U.S. Treasury bonds interest is typically taxable at the federal level. U.S. Treasuries are exempt from state and local income taxes. Most interest income earned on municipal bonds is exempt from federal income taxes.
