Corporate Sector Leads Pack in Record-Breaking Year for Sustainability Bonds

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The corporate sector was responsible for 57% of the record-breaking number of sustainability bonds issued in the first nine months of 2021  — a 93% increase year over year, according to a Q3 2021 sustainable finance review by Refinitiv. The latest numbers add support to earlier predictions that the sustainability bond market could surpass $1 trillion in a single year by the end of 2021.

Leading the pack was JP Morgan, which underwrote 6.4% of sustainability bonds in the first nine months of 2021. BNP Paribas and CitiBank ranked second and third, respectively. The top ten corporate sustainability bond underwriters comprised 47.1% of the overall market, up from 40.3% a year ago.

In contrast, government issuers accounted for 41% of overall activity, down from 53% at this point last year.

Europe was the largest regional market for sustainability bonds, accounting for 56%, compared to 21% from the Americas and 19% from Asia Pacific.

During the first nine months of 2021, sustainability bonds totalled $777.6 billion — 57% more than a year ago and the highest quantity ever recorded in such a period, in terms of both dollars and number of issuances.

Refinitiv found that record-breaking numbers were not limited to the sustainable bond market:

  • The syndicated loan market totaled $448.6 billion in sustainable lending — triple last year’s number and an all-time high for the first nine months of the year.
  • Sustainable activity in equity capital markets totaled $28.5 billion — a 48% increase from last year, breaking the first-nine-months record.
  • Mergers and acquisitions activity involving sustainable companies totalled $136.1 billion — nearly triple 2020 levels and yet another all-time high.

Sustainability bonds, like traditional bonds, are financial instruments sold with a promise to eventually repay the principal and a fixed rate of interest. However, the revenue from sustainability bonds is specifically earmarked to fund environmental initiatives such as energy efficiency, clean transportation, and ecosystem protection.

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