Some $777.6bn worth of sustainable finance bonds were issued during the first nine months of 2021, a 57% increase compared to 2020 and an all-time record, according to Refinitiv. Sustainable finance bonds cover green, social and several other emerging categories of bonds, such as forest bonds and vaccine bonds, which raise funds for use in projects with a positive environmental or societal impact.
In the third quarter, sustainable finance bonds totalled $229.9bn, a 12% decrease compared to 2020. But despite this slowing, the third quarter of 2021 still marks the third-highest quarterly total for sustainable finance bonds by proceeds and number of issues since Refinitiv began its records in 2015.
Interestingly, sustainable finance bonds accounted for a record 10% of global debt capital markets proceeds during the first nine months of 2021, compared to 5.9% a year ago, demonstrating the increasingly mainstream nature of sustainable bond issuance.
Green bonds continue to account for the biggest share of sustainable bond activity at $365.2bn during the first nine months of 2021. The number of deals in the third quarter dropped by 22% compared to the second quarter, and the value of proceeds raised declined 4%; however, the second quarter of 2021 was the highest on record for green bond issuance by volume.
For social bonds — a category that has seen a significant uplift since the outbreak of the pandemic — issuance levels in the first nine months reached $171.6bn, a 96% year-on-year increase. However, during the third quarter, $31.1bn social bonds were printed, a 36% decline compared to the second quarter.
A significant trend during 2021 has been the resurgence of corporate activity relative to sovereign, supranational and agency (SSA) issuers. In the wake of the pandemic, SSA issuers accounted for the majority of sustainable bond issuance as they sought to raise funds to counteract its impacts, as well as continuing environmental programmes. In the first nine months of 2021, SSA issuers accounted for 41% of overall activity, compared to 53% during the same period in 2020. The value of proceeds raised in the first three quarters of 2021 by corporate issuers increased 93% year-on-year.
However, SSA issuers held the five top spots as the most prolific sustainable finance bond issuers by value of proceeds raised. France topped the table, raising $65.9bn via 19 issuances, followed by the EU, Germany, Chile and the World Bank.
European issuers continue to account for the lion’s share of sustainable finance bond issuance at 56%, although Americas and Asia-Pacific (excluding Japan) issuers are increasingly making their mark, accounting for 21% and 19% of proceeds, respectively.
Looking at sustainable finance bond underwriters, JPMorgan moved into the top spot, with 6.4% market share during the first nine months of 2021. It was followed by BNP Paribas and Citi.
