Liquidity In Credit Markets Is Getting Greener, Report Says
S&P Global Ratings announced a significant growth in sustainable debt markets, forecasting a 40% year-over-year increase in sustainable debt issuance for 2021. This surge is driven by heightened interest in ESG factors, as issuers and investors aim to meet sustainability goals. The report indicates a trend where sustainable bonds may be priced at a premium, though isolating the impact of ESG is challenging. Improved standardization could further enhance liquidity in these markets, while issuers failing to meet ESG criteria may encounter higher financing costs.
- 40% expected increase in sustainable debt issuance for 2021.
- Growing liquidity in sustainable debt markets indicates stronger performance.
- Increased interest in ESG factors supports long-term market stability.
- Issuers not meeting ESG standards may face higher financing costs.
DUBLIN, July 8, 2021 /PRNewswire/ -- (S&P Global Ratings) Liquidity is steadily increasing across sustainable debt markets, with a
Given the surging interest in environmental, social, and governance (ESG) factors, a report published today by S&P Global explores liquidity and pricing within sustainable debt markets. See our report, "Green Liquidity Moves Mainstream."
"Liquidity is growing as issuers and investors alike seek to deliver upon their ESG goals and objectives, and this should bode well for the future growth and stability of sustainable debt markets," says S&P Global Ratings Sector Lead Patrick Drury Byrne.
According to the report, there are some signs that sustainable bonds may be pricing at a premium in certain sectors, although it is difficult to isolate the impact of ESG factors.
"Improved standardization within sustainable debt markets could bolster liquidity further," says Drury Byrne. "However, issuers that cannot satisfy investors' ESG thresholds may in time face higher financing costs and lower liquidity."
The report also discusses the path to greener monetary policy. Greening monetary policy operations might not be an easy task, but options exist, and their implementation could accelerate the development of green liquidity, especially in the corporate bond space.
This report does not constitute a rating action.
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