Drop in emission-focused bond issuance marks the first half of 2025, reports S&P
Emerging Market Sustainable Bond Issuance Remains Significant but Faces Mixed Trends
As of mid-2025, emerging market sustainable bond issuance continues to play a crucial role in the global sustainable debt market, which has surpassed USD 6 trillion cumulatively. Despite a slight decline in overall global sustainable bond issuance, emerging markets have remained key players, particularly in financing energy transition and climate adaptation projects.
According to S&P Global Ratings, emerging market economies accounted for 12% of global sustainable bond issuance in the first half of 2025, a figure that the report predicts will increase to 10-15% for the entire year. Development banks have been particularly active, pricing USD 63.6 billion in sustainable debt in Q1 2025 alone, a significant portion of which likely supports emerging markets' climate agendas.
The energy transition outlook is more encouraging than climate adaptation, according to Rafael Janequine, director of sustainable finance at S&P Global Ratings. However, he attributes the decline in the sustainable debt market to ongoing global macroeconomic and geopolitical uncertainties.
Despite the decline, there are positive signs of growth in the sustainable bond market. S&P's research highlights Engie Peru and Companhia Brasileira de Alumínio's recent deals as key milestones for integrating adaptation-related key performance indicators (KPIs) into labelled debt structures. The continued development of adaptation KPIs, coupled with regulatory reforms and framework building, suggests that the funding mix could become more balanced over time.
The updated 2025 Green Bond Principles have also emphasized the use of proceeds focused on green enabling projects, which support the development or scaling of climate solutions, even if direct environmental outcomes are not immediate. This signals an evolving sustainable bond market increasingly tailored to complex, multifaceted climate and adaptation projects typical in emerging economies.
However, funding for climate adaptation projects remains relatively small in volume and tends to be more concentrated in the public sector. EM sovereigns and corporates are preparing pipelines of labelled bonds, supported by regulatory advances. Adaptation finance remains a small fraction of total sustainable debt volumes in EMs, according to S&P's findings.
Janequine believes issuers are actively developing sustainable financing frameworks to seize future issuance opportunities. Some markets are making significant progress towards establishing a more supportive and transparent regulatory environment, which should foster medium-term growth for EM+ sustainable financing, according to the report.
Despite unpredictable US trade policy and certain macroeconomic headwinds, the outlook for EM sustainable bond issuance remains positive. A rebound in EM+ sustainable bond issuance is expected once these macroeconomic headwinds ease. From a net-zero perspective, S&P's report warns that the shift towards energy transition could exacerbate climate vulnerability in EMs. However, the continued development and integration of adaptation KPIs into labelled debt structures could help mitigate these risks.
[1] Climate Bonds Initiative, Global Green Bond Market Quarterly Review, Q1 2025 [2] International Finance Corporation, Green Bond Principles 2025 [3] S&P Global Market Intelligence, Global Green Bond Issuance Soars to Record USD 262.3 Billion in Q1 2025 [4] European Investment Bank, Bpifrance Issues EUR 1 Billion Green Bond for Supporting Climate-Tech and Infrastructure Projects, April 2025 [5] S&P Global Ratings, Emerging Markets Sustainable Bond Issuance Declines in First Half of 2025, June 2025
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