The issuance of green, social, sustainability, and sustainability-linked bonds (GSSSB) is forecast to reach around $1 trillion in 2024, according to S&P Global Ratings. While this marks a modest increase from 2023, it falls short of the record highs seen in 2021. Despite the slowdown, S&P expects continued diversification within the market, with transition and blue bonds gaining prominence alongside the dominant green bonds.

Key Findings:

• GSSSB issuance to reach $0.95 trillion to $1.05 trillion in 2024, up slightly from $0.98 trillion in 2023.
• Green bonds to remain dominant, driven by rising global demand for environmental projects.
• Transition bonds expected to see a strong year, offering financing options for issuers in non-traditional green sectors.
• Blue bonds, targeting sustainable maritime resource use, also anticipated to grow.
• Sovereign issuers likely to set another record in 2024, with new entrants joining the market.
• Emerging markets expected to gain traction, driven by local currency issuance and new participants.
• North America’s GSSSB issuance may face challenges due to macro and political pressures, but could see growth from decarbonization initiatives.

Market Maturation Leads to Diversification:

S&P notes that the GSSSB market is maturing, with its share of overall bond issuance expected to stabilize or slightly increase. As a result, overall financing conditions will play a major role in determining the final 2024 issuance figure within the projected range. Instead of significant overall growth, 2024 is likely to see a broader geographic reach and wider variety of instruments offered within the GSSSB market.

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Quote from S&P Global Ratings:

“We anticipate that 2024’s growth will be only moderate compared with 2023, and that we will not yet see GSSSB issuance reach the peaks of 2021. Since we expect penetration of GSSSBs in overall bond issuance to consolidate further and potentially inch higher, we think overall financing conditions will be the main driver of variability around our $1 trillion issuance forecast for 2024… As GSSSB markets continue to mature, 2024 may be a year of broadening regional reach and instrument types as opposed to strong overall growth.”

Despite a projected slowdown in growth, the GSSSB market is expected to continue expanding and diversifying in 2024. New bond types like transition and blue bonds are poised for significant growth, while established categories like green bonds maintain their dominance. With continued participation from diverse issuers and regions, the GSSSB market continues to play an important role in financing sustainable projects and initiatives

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