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ESG Newsletter published on April 1, 2022

Sustainable Bond Issuance Is Growing Across Bond Market Segments


  • Sustainability bond issuance totaled $10.6 billion in February, 2022, 60 percent higher year-over-year.
  • Increasing issuance illustrates the market’s favorable view of sustainable bonds.
  • Broadening use of green, social, sustainable, and sustainability-linked bonds across bond market segments suggests continued growth in the years ahead.

A consistent increase in issuance during early 2022 demonstrates the market’s continued favorable view of sustainable bonds. In this article, we provide an update to our April 2021 assessment of the sustainable bond market.

Sustainability bond issuance totaled $10.6 billion in February, 60 percent higher year-over-year.1 So far this year, according to data compiled by Bloomberg,2 companies and governments globally have raised about $94 billion in green bonds, the environmental bonds that comprise one component of the sustainable bond market. That record pace surpasses the more than $86 billion borrowed in the same period last year.

“It’s a pretty amazing thing to see how much capital is coming in, and yet we’re just getting started. You’re going to see a lot of action,” said Brian Moynihan, chief executive officer of Bank of America Corp., the second-largest underwriter of green bonds, according to Bloomberg

Issuers of sustainable bonds—including green, social, sustainable, or sustainability-linked bonds—commonly use proceeds for eligible projects or to improve environmental, social, and governance (ESG) metrics or performance.

Moody’s estimates that sustainable bonds sales will hit $1.35 trillion in 2022 (See Exhibit 1). U.S. dollar denominated bonds comprise more than a third of the global sustainable bond market (See Exhibit 2).

Sustainable bonds on the rise in municipal markets

While historically corporate sustainable bond issuance leads the pack, Standard & Poor’s sees municipal green, social, and sustainable bond issuance surpassing $60 billion in 2022.3 A municipal market segment that has seen solid growth in social and sustainability bonds issuance is affordable housing projects, for example. One entity issued $4.2 billion in 54 social-labeled bonds in 2021.

Generally, investors look at the use-of-proceeds for essential service municipal debt as being aligned, at least philosophically, with many sustainable goals. Bonds can be viewed as having objectives aligned with sustainability themes if they are issued to fund environmental projects, such as coastal erosion protections or inner-city heat islands, or social programs, including education or water and sewer services, for example. For this reason, the essentiality of municipal projects generally align well with green, social and sustainable-labeled debt.

An important step in broadening interest in sustainable bonds among investors across retail and institutional segments is providing adequate disclosures in offering documents, thereby addressing the needs of both ESG impact investors and those focused on ESG research as a risk mitigation tool. Investors seek clear insight into the use-of-proceeds for sustainable issues, to avoid greenwashing, and to monitor performance of the bonds and the projects they seek to support.

Efforts to consider improvements to disclosures about green, social, and sustainable bonds in the municipal market are underway. While the Securities and Exchange Commission promotes full public disclosure and protects investors against fraudulent and manipulative practices in the market, at the end of 2021, the Municipal Securities Rulemaking Board distributed a request for information to solicit public input on ESG practices in the municipal securities market. In response, Breckinridge submitted a comment letter in support of standardized, sector-based disclosure of material ESG information in municipal primary offerings and continuing disclosure materials. The National Federation of Municipal Analysts also formed working groups on green bond disclosures, development of a Green Bond Survey, and for recommended best practices for public power and state revolving loan funds. Breckinridge has been actively involved in the green bond disclosure working group. Finally, to support the continued development of the sustainable bond market, Breckinridge joined the Advisory Council for the International Capital Market Association’s Green and Social Bond Principles.

Securitized and sovereign bond issuers view sustainable bond opportunities

Issuers in the securitized and sovereign segments of the bond market also are poised could increase offerings designated or labelled as sustainable bonds, depending on the underlying securities.

The Federal National Mortgage Association (Fannie Mae), an MBS issuer, developed a Sustainable Bond Framework for offerings, with proceeds financing projects benefiting environmental (green debt) or societal (social debt)) goals or a combination of those two benefits (sustainable debt). These characteristics are features on the loans that underly Fannie Mae’s MBS offerings.

In ABS to date, labelled ESG issuance is limited. The approximately $9 billion of issuance in 2021 is small when compared with the $270 billion in total ABS issuance.4 The Structured Finance Association ESG task force is developing market consensus disclosures for securitization with a goal of delivering a framework in 18 to 24 months. The effort could encourage additional sustainable bond issuance in ABS sectors.

Sovereign bond issuers also are expanding their involvement in sustainable bonds. Furthermore, since Poland issued the first sovereign green bond in December 2016, more countries have been entering the market. Sovereign GSS issuance grew from $10.7 billion in 2017, to $17.5 billion in 2018 and $21.8 billion in 2019, and reached $40.5 billion in 2020, according to data compiled by Moody’s Investors Service and Environmental Finance.5

Even in a year of subdued bond issuance, managers are finding opportunities in the sustainable bond markets, thanks to investor appetite for bonds with sustainable labels as well as efforts to strengthen disclosures across sustainable bond market sectors. Sustainable bonds offer managers a broader opportunity set of green, social, sustainable, and sustainability-linked bonds for strategies that follow or align with ESG risk mitigation and impact approaches.


[1] “Sustainability Issuance Jumps as Social Bonds, ESG Loans Flop,” Bloomberg, March 4, 2022.

[2] “Bank of America’s Moynihan Sees Strong Demand for Green Debt,” Bloomberg, March 10, 2022.

[3] “U.S. Municipal Sustainable Debt Issuance Could Surpass $60 Billion In 2022,” S&P Global Ratings, February 10. 2022.

[4] Bank of America Securities, December 2021.

[5] “Sustainable Bond Insights 2021,” Environmental Finance, 2021.

DISCLAIMER: The opinions and views expressed are those of Breckinridge Capital Advisors, Inc. They are current as of the date(s) indicated but are subject to change without notice. Any estimates, targets, and projections are based on Breckinridge research, analysis and assumptions. No assurances can be made that any such estimate, target or projection will be accurate; actual results may differ substantially.

Nothing contained herein should be construed or relied upon as financial, legal or tax advice. All investments involve risks, including the loss of principal. Investors should consult with their financial professional before making any investment decisions.

While Breckinridge believes the assessment of ESG criteria can improve overall credit risk analysis, there is no guarantee that integrating ESG analysis will provide improved risk-adjusted returns over any specific time period.

Some information has been taken directly from unaffiliated third-party sources. Breckinridge believes such information is reliable but does not guarantee its accuracy or completeness.