US$330BN worth of emerging market green bonds expected to mature in the next three years: report

Read: Issuance of emerging market green bonds expected to reach US$240BN by 2025: report

The report, which was produced in collaboration with World Bank Group’s entity the International Finance Corp., found that weaker global economic growth and regulatory changes in Europe designed to curb greenwashing could result in a reduction of sustainable funds that buy GSSS assets.

Another roadblock for this asset class, it noted, is the potential for interest in sustainable investments having peaked already across countries. If so, this would add uncertainty to projected flows of finance to fund technological upgrades and sustainable development in emerging markets.

These green bonds reached an all-time high issuance of more than US$1 trillion in 2024 on a gross basis, a three per cent increase from the previous year. Despite the value increase its share of total fixed income issuance declined to 2.2 per cent in 2024 compared to 2.5 per cent in 2023.

The report also found the total sales of GSSS bonds declined 14 per cent year-over-year due to lower issuance in China. However, the asset class saw its share of the broader bond market increased to more than five per cent in emerging markets outside of China, the highest seen so far.

“Looking ahead, the long-term outlook for GSSS bond issuance in emerging markets remains robust, underpinned by increasingly competitive renewable energy technologies and ongoing commitments by governments and investors in Europe and Asia,” said Susan M. Lund, vice-president of economics and private sector development at IFC, and Yerlan Syzdykov, global head of emerging markets at Amundi, in a press release.

Read: Challenges for institutional investors around green bonds