At Any Rate
Emerging Markets: The EM Fixed Income Sustainable Debt Asset Class
Mar 24, 2025
Virginia Martin Heriz, Global Head of ESG Methodology and Integration at JPMorgan Research, and Lydia Harvey, Head of ESG Index Strategy and Integration, share insights on the booming EM fixed income sustainable debt asset class, now worth $1.4 trillion. They discuss the surge in green bonds, corporate issuances, and 'Greenium' in this sector. The duo dives into the importance of water security and biodiversity in sustainable debt, as well as innovative financial mechanisms like debt for nature swaps that are paving the way for a greener future.
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Quick takeaways
- The EM sustainable debt market has grown to $1.4 trillion, primarily driven by labeled bonds funding green and social initiatives.
- Corporate sustainable bond issuance in emerging markets has surged, highlighting a shift towards diverse environmental themes and broader investor interest.
Deep dives
Growth of EM Sustainable Debt Market
The EM sustainable debt market has seen substantial growth, reaching a size of $1.4 trillion, which now represents 14% of the EM hard currency bond stock. This expansion originates largely from the rise of labeled bonds, where proceeds are allocated to green and social initiatives. Green bonds account for 59% of the total, while sustainability-linked bonds remain a smaller segment at 4%. Furthermore, social bonds have experienced a remarkable 46% increase over the past year, indicative of the evolving interest in sustainable investments across both private and public sectors.
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