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Emerging ESG bond boom: from 7% to 17% of issuance
07/13/2021 Since 2 months

According to Federated Hermes’ calculations, the role of emerging markets in this type of issuance (green, social and sustainable) is growing sharply in 2021. Corporate issuance from emerging countries will reach $51 billion in 2021, accounting for almost 17% of total issuance, when on average, in recent years, their contribution to this market has not exceeded 6% or 7%. Emerging countries are therefore having a sharp awakening to this market, and are already issuing at a higher rate than US investment grade companies.

Asia was the largest emerging issuer in the past (91% of issuance in these markets in 2018), but the weight of Latin America has greatly expanded. Growth is seen in Brazil, which in 2021 already accounts for 9% of volume, compared to an average of 5% in recent years, and in Mexico (which stands at 5% in 2021, up from just 1% previously).

Considering data for social bonds (which finance projects linked to health, social services, employment, etc.), in addition to China, other emerging countries are among the top 10 issuers: South Korea was fourth, and Chile and Guatemala ninth and tenth, respectively.

The financial sector remains dominant, accounting for 40% of placements in 2021. However, others have grown: real estate; consumer and technology-media.

Issuance by companies and financial institutions is gradually being joined by emerging sovereign issuers. In July, as already published in news on the platform, Mexico placed its second sustainable bond, linked to the Sustainable Development Goals (SDGs).

This post is also available in: Spanish Portuguese (Brazil)

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