Bond issuance is expected to climb 4.3% in 2024, with a whopping $950 billion to $1.05 trillion coming from "good for the planet" bonds.

That is according to a new report by S&P Global, which predicts these "sustainability-linked" bonds will make up 14% of all issued bonds, for the second year in a row.

"After a record 2023, we expect even more government bonds in 2024," said the report. "This is thanks to countries' commitments to sustainability and help from others." But there is a small cloud on the horizon: rising interest rates and other economic uncertainties could slow down the growth of this "good for the planet" bond market.

Speaking of fast growth, the Middle East saw its "green bond" issuance skyrocket by 149% in 2023, reaching a cool $23 billion. "We expect companies in the UAE and Saudi Arabia to keep issuing the most bonds in the region," added the report.

Governments and big corporations are also expected to play a big role in reaching sustainability goals and achieving net-zero carbon emissions. Plus, another type of "green" investment, called "sustainable sukuk," is on the rise. These are Islamic finance instruments that follow eco-friendly principles.

This growth is likely to continue as investors increasingly seek out sustainable options and countries with strong Islamic finance traditions aim to be more eco-friendly.

While high-income countries have been the main players in the "green bond" market so far, the report suggests others might join the party in 2024. This could mean more issuance from high-income countries in Asia Pacific, Latin America, and the Middle East, paving the way for even lower-income nations in these regions to tap into this market.

So, whether you are an investor looking for good returns and a healthy planet or a company looking to fund eco-friendly projects, the "green bond" market is definitely one to watch.

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Source: Arab News