Global issuance still on track to meet US$950 billion full-year forecast.

The global issuance of sustainable bonds slowed in the third quarter, leaving supply down marginally for the year, according to Moody’s Ratings.

In a research note, the rating agency reported that global issuance of green, social, sustainability, sustainability-linked and transition bonds declined by 14% in the third quarter to US$216 billion.

As a result, through the first nine months of the year, global issuance of sustainable bonds is down by 3% compared with the same period last year.

Given the rise in overall bond issuance this year, the market share for sustainable bonds within the overall global bond universe has dropped this year too. It’s averaging 11%, which Moody’s said represents the segment’s lowest share since 2020.

In the third quarter, European sustainable bond issuance suffered the sharpest decline, dropping 38% quarter-over-quarter to around US$80 billion, it noted.

Of the US$216 billion of sustainable bonds that were issued in the third quarter, green bonds led the way at US$129 billion, followed by US$41 billion of sustainability bonds, US$37 billion of social bonds, US$6 billion of sustainability-linked bonds and US$3 billion of transition bonds, Moody’s reported.

Sustainable loan volumes are down sharply this year too, it noted. Total volume is down 34% from the same period last year, to US$380 billion. And, in the third quarter, sustainable loan volumes totalled just over US$100 billion, it said.

Yet, despite this recent weakness, Moody’s said that it still expects new sustainable bond issuance to reach its full-year forecast of US$950 billion, “buoyed by relatively robust volumes in the first half of the year and continued issuer appetite for funding environmental and social projects with labelled bonds.”

Indeed, the latest global conferences on climate change and biodiversity highlighted the role of the sustainable debt market in providing financing to meet policymakers’ commitments in these areas, it said.

“Given the need for greater financing to support national biodiversity strategies, the labelled bond market will be increasingly at the centre of efforts to channel capital to a broader array of projects. Continued growth in sustainable bonds will also support increased investment in climate mitigation and adaptation efforts, especially for emerging markets,” the report said.