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Green bonds stay strong as sustainable finance weathers wider market storm

Matthew Toole
Matthew Toole
Director, Deals Intelligence

The young market for sustainable finance has held up well during the market turmoil of early 2022. Sustainable finance bonds increased but equity issuance has fallen sharply, while M&A also dropped, albeit less dramatically.


  1. Green bonds raised $233bn in H1, rising through Q2 as proceeds exceeded $100bn for the sixth consecutive quarter.
  2. Asia Pacific-dominated sustainable equity issuance plummets by 95 percent in Q2
  3. The number of sustainable M&A deals hit an all-time high during H1 2022, reaching 670 deals during the period – up 22 percent.

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The market for sustainable finance products shrunk during the first six months of 2022 following a general retreat across capital markets in the face of geo-political and economic uncertainty.

Sustainable finance bonds raised $422bn, a fall of 23 percent compared with the first half of 2021. This marks the first decline since records began in 2015. The number of issues during H1 fell 11 percent.

The trajectory during the period was also negative, with sustainable-finance bond issuance in the second quarter of 2022 9 percent smaller than Q1. Even so, the capital raised between April-June surpassed $200bn (from more than 400 issues) – the sixth consecutive quarter to do so.

As a proportion of the overall debt capital markets, sustainable finance slipped just one percentage point to take a 9 percent  share of the market.

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Green bonds off-set decline in social bonds

Green bonds continued to account for the lion’s share of sustainable-finance bond issuance from January-June, raising some $233bn, a modest 4 percent decline year-on-year. However, Q2 bounced back to close-to all-time highs.

Proceeds from green bonds surpassed $100bn for the sixth consecutive quarter, although, by number, first-half issuance was down 13 percent.

The results match the findings of Refinitiv’s Dealmakers Sentiment Survey, where responses focused almost exclusively on the environment, to the exclusion of social or governance issues.

Social bonds have been almost the mirror image of green bonds since the start of 2021, falling precipitously during that year, an uptick in early 2022 followed by a 31 percent fall between Q1 and Q2.

So far this year, social bond issuance is down 60 percent on H1 2021. By number of issues, social bonds are down 8 percent year-on-year.

Meanwhile, brief recovery in sustainability bonds in Q1 was similarly scotched during the second quarter, bringing the total for the first six-months of 2022 to just $74bn, a 26 percent decline from the same period last year. The number of issues fell 18 percent.

Corporate issuers curtailed their activity, with issuance down 10 percent in the first half. However, they constituted 63 percent of the market, up from 53 percent a year ago, as agency and sovereign issuers pulled back even harder.

Europe remains the dominant region for sustainable finance, taking more than half the market, with 24 percent from the Asia Pacific and 19 percent from the Americas.

In the H1 sustainable bond league tables, BofASecurities consolidated its lead to take first place and 5.4 percent of the market, followed by HSBC and JPMorgan.

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Deal making – Q2 deep dive

American borrowers prop up sustainable lending

The aggregate value of sustainable syndicated loans is down 11 percent year-on-year, totalling $325bn in the first half of 2022. However, an encouraging Q2 bounce-back saw lending up 18 percent on the quarter.

American borrowers led the way, taking 48 percent of the market, although the largest facility of the year so far is the $6.3bn loan raised by Spain’s Telefonica.

Europe as a whole accounted for 34 percent of lending, followed by 15 percent for Asia Pacific – its lowest first half proportion since records began.

Asia Pacific dominates troubled sustainable equity market

Wider market turmoil saw equity raised by sustainable companies fall precipitously during the first half of 2022 to raise just $14bn. Most of this was raised in the first three months of the year, after which, the market fell 95 percent to levels not seen since early 2018.

Asia Pacific accounted for an impressive 89 percent of sustainable equity issuance in the first half of 2022, accounting for four of the largest 10 offerings, including the massive $11bn outlier raised in the flotation of South Korea’s electric vehicle battery maker, LG Energy Solution in January.

Morgan Stanley topped the bookrunner league tables. Together with Goldman Sachs and BofASecurities, the top three covered one-quarter of the market for sustainable equity.

Sustainable M&A shows resilience

M&A involving sustainable companies held up well in the first half of 2022, despite wider market jitters.

More than $90bn of deal activity was announced during the period, just 3 percent on the same period last year. Meanwhile, the number of M&A deals surged 22 percent to reach 670, an all-time high for any first half period.

China was the most active country for sustainable corporate acquisitions, taking 18 percent of the market, and the wider Asia Pacific region constituted five of the ten largest M&A transactions.

JPMorgan led the M&A advisory league tables, followed by Goldman Sachs and Morgan Stanley.

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Sustainable finance bonds increased but equity issuance has fallen sharply.