Sustainable Bond Issuance Hit by Geopolitical Tensions - Refinitiv
(12 April 2022 – Global) Global sustainable bond issuance decelerated faster than the broader market in Q1 2022, negatively impacted by rising volatility after Russia invaded Ukraine and hawkish central bank monetary policy according to the latest Refinitiv data.
Green bond issuance is down seven percent to US$110.4b in the three months to March 2022 compared to the same time last year according to the latest Q1 2022 Refinitiv data. Total issuance has fallen 19 percent year-on-year (YOY) to US$231.7b which compares to a five percent decline in broad-market issuance to US$2.49t over the same timeframe. The proceeds from Green Bonds issuance are used for specific environmentally friendly developments.
The Refinitiv data revealed JPMorgan, BNP Paribas and BofA Securities were the top three bookrunners of global green bond issuance in Q1 2022. Social bonds, which relate to raising capital for projects with positive social outcomes such as improving health or providing affordable housing issuance, witnessed issuance slide to US$44 billion, marking a sharp 55 percent decline YOY.
"Certainty of Fed rate hikes and asset sales, tangible evidence of price inflation and the Russian/Ukraine conflict, collectively brought fear to investors in the fixed income markets in the first quarter of 2022," said Shelton Capital Management Fixed Income Portfolio Manager, David Falk.
“Inflationary pressures, which have been exacerbated by the conflict in Ukraine, have made renewable projects a tougher sell. The lack of new social bonds coming to market was mostly anticipated, as the rise of new issuance over the past few years had a heavy tie to COVID-19-related initiatives” commented Sage Advisory Services Senior ESG Research Analyst, Andrew Poreda.