ING – Global ESG Bond Supply Outlook, 2024

The global ESG bond markets have experienced significant growth in the past seven years, reaching a peak of €1 trillion in 2021. However, due to factors such as the decrease in Covid-19 mitigation bond issuance, supply chain disruptions, inflation, and higher funding costs, growth has slowed since 2022. The market conditions are expected to remain relatively stable in 2024 compared to 2023. ING forecasts a global ESG bond supply of €820 billion for 2024, which is similar to the estimated amount of €815 billion for 2023. Sovereigns, supranationals, agencies, financial institutions, and corporates are predicted to issue €325 billion in EUR bonds. The US dollar market is expected to remain stable at €225 billion (US$240 billion), while bonds in other currencies are projected to grow softly from €260 billion to €270 billion. Governments, supranationals, and agencies are expected to contribute the most to ESG bond issuance, accounting for approximately half of the total EUR issuance in 2024. However, the European Union's dominance in the green bond segment has slowed down, with only €7.7 billion issued in 2023 compared to €24.4 billion in 2022. The EUR-denominated sovereign ESG issuance currently stands at close to €64 billion, slightly exceeding expectations. Overall, ESG issuance growth is anticipated to stagnate in 2024 due to potentially lower government funding plans, with a forecasted gross ESG issuance of €60 billion for the sector.