Emerging Market Real Economy Sustainable Bonds: Current and potential issuance: Volume II

June 6, 2023

The challenging market environment of 2022, including geopolitical conflicts and high inflation, saw the overall number of sustainable bonds issued decline year-on- year for the first time in a decade, falling from the record high of $1.03trn (trillion) in 2021 to $890bn (billion) in 2022. However, sustainable bonds' share of the overall fixed income market grew to 13.7% in 2022, up from 11.8% in 2021.

The six focus countries —Kazakhstan, Pakistan, Poland, Romania, Türkiye, and Uzbekistan— have issued 59 bonds worth almost $21bn. The three largest countries analyzed – Poland, Romania and Türkiye – were responsible for 50 of the 59 bonds. There have been six Kazakhstani sustainable bonds, two of which were from a real economy issuer; the only Pakistani sustainable bond is from a real economy issuer and the only sustainable bond issued from Uzbekistan is a sovereign bond.

The high potential for sustainable bond issuance in each country and sector is supported by encouraging government policies and high global appetite for sustainable bonds amongst investors but tempered by systemic and structural sector and capital market challenges. There are additional challenges for prospective emerging market real economy issuers surrounding bond currency, market liquidity, reporting infrastructure, project availability, and human capital and sustainable debt knowledge gaps. We explore these in our newest report.