Emerging Market Green Bonds Report 2023: Green bonds issuance in emerging markets increased 34% in 2023

​IFC and Amundi publish the sixth edition of the Emerging Market Green Bonds Report, as emerging market green bonds issuance increased 34% in 2023.

Paris, 22^nd May 2024 – Amundi, the leading European asset manager, and IFC, a member of the World Bank Group, today published the sixth edition of the Emerging Market Green Bonds Report that provides developments in the green bonds market for emerging markets and developing economies (EMDEs). The report focuses on green bonds issuances in EMDEs as well as the overall sustainable bonds market's growth, perception and outlook.

Against the backdrop of broadly favorable financial market developments, the overall market for sustainable finance in EMDEs staged a rebound in new debt issuance during 2023 on the back of lower inflation expectations. 

Green bonds issuance in emerging markets increased 34% year over year, reaching $135 billion in 2023. Meanwhile, the broader category of Global Green, Social, Sustainability and Sustainability-Linked (GSSS) bonds issuance exceeded $1 trillion in 2023, matching the all-time high reached in 2021. GSSS performance helped this segment increase its weight in international capital markets to account for 2.5% of global fixed income issuance in 2023, up from 2.2% a year earlier. This growth can be largely attributed to governments and companies stepping up efforts to confront climate challenges in developing economies.

Growth in emerging market sustainable bonds issuance is set to continue through 2025, with Amundi forecasting 7.1% year over year growth for GSSS bonds and 7.5% growth for green bonds. Amundi's outlook assumes a relatively stable global backdrop of easing inflation without major escalations in geopolitical tensions.

The report also discusses the most significant initiatives launched in 2023 in the GSSS bonds space, including new taxonomies launched in the ASEAN region, Latin America and the Caribbean, and Singapore, as well as initiatives aimed at funding efforts to reverse biodiversity loss.

"Financing sustainable projects in emerging market economies will require deeper capital markets to fund economic and energy transitions," comments Susan Lund, Vice President, Economics and Private Sector Development, IFC. "To achieve these goals, substantial efforts must be made to ensure continued growth in the Global Green, Social, Sustainability and Sustainability-Linked bonds market, including enhancing regulations and standardizing best practices."

Yerlan Syzdykov, Global Head of Emerging Markets, Amundi, adds, "Over the medium term, we anticipate continued growth in green bonds issuance within emerging markets, driven by several factors: an acceleration of the energy transition, a competitive pricing advantage for issuers compared to developed markets, and favorable macroeconomic conditions, such as high nominal yields at a time of relatively slow growth, which typically favors fixed income over equities."

Highlights from the 2023 report include:

• A strong rebound in GSSS bonds issuance globally (up by 11%, after a 10% retreat in 2022), driven by green bonds (up 15%) as well as by emerging markets (up 45%), reaching $1 trillion to match the all-time high seen in 2021.
  

• Within emerging markets, strong GSSS bonds issuance across all sub-segments (up by 45% overall in emerging markets and 65% in EMDEs outside China). China's strong but relatively slower GSSS bonds issuance (up by 28%) was driven by a combination of two factors: some reversion from a remarkably strong 2022, and weaker domestic economic dynamics, particularly in the construction and real estate sectors.
   
• In 2023, China remained the largest green bonds issuer in emerging markets ($89.1 billion), growing by 18% year over year.
   
• In EMDEs outside China, GSSS bonds issuance was mainly driven by green bonds, which increased by 81%. In the Middle East and North Africa, most notably UAE and Saudi Arabia, green bonds issuances more than doubled.  
   
• Excluding supranational issuers, green bonds penetration (issuance as a proportion of overall fixed income) reached 1.4% globally, an all-time high. Across regions, this was highest for emerging markets outside China (2.1%), and lowest for developed markets (1.3%).
  
  
• Non-financial corporates remained the largest green bonds issuers in developed markets (36% of the total), while financial institutions continued to dominate in emerging markets (58% of the total). Green bonds issuance by sovereigns grew strongly: 33% globally and 226% in emerging markets.
   
• The largest share of funds raised from the green instruments in EMDEs during 2023 was allocated for renewables, at 37%. The next biggest allocation was for green buildings claiming 29% of the total from 9% a year earlier.
  

The full Emerging Market Green Bonds Report 2023
is available here

About IFC

IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.

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