By Patturaja Murugaboopathy

(Reuters) – Global sustainable bond issuance slowed more than the broader global market in the quarter. This was due to a spike in volatility following Russia’s invasion of Ukraine, as well as tightening monetary policies around the globe.

Refinitiv data showed that the slowdown occurred after record-breaking issuances of bonds tied to social or environmental goals for 2021.

The total issuance of social, green and sustainability bonds as well as those by sustainable businesses such as renewable energy was $231.7 billion for the first quarter 2022. This is a 19% decrease from last year.

Over the same time, the overall market for Issuance fell by 5% to $2.49 Trillion.

Although assets of all sizes have always been helped by the moderate monetary policies of the U.S. Federal Reserve (and other central banks), the first quarter of this year saw signs of global tightening.

David Falk, Shelton Capital Management’s fixed income portfolio manager said, “Certainty Fed rate hikes, asset sales, tangible evidence price inflation, and the Russian/Ukraine war, collectively caused fear to investors on the fixed income market in the first quarter in 2022.”

Green bonds are issued where proceeds can be used to fund a particular environmentally-friendly project. This was a 7.7% decrease from the previous year.

For a related graphic on Global issuance of green bonds, click https://tmsnrt.rs/3ra6U9q

Andrew Poreda from Sage Advisory Services is a senior ESG researcher analyst. Poreda said inflationary pressures that have been exacerbated due to conflict in Ukraine had made renewable projects more expensive.

He said that prices rising across the entire renewable energy value-chain “will cause headwinds in the near term for new projects, so (the amount of issuance) is not surprising if you take a look at Q1 numbers.”

For a related graphic on Global issuance of sustainability bonds, click https://tmsnrt.rs/3NV07tS

Social bonds are used to raise money to finance projects that improve health or provide affordable housing. In fact, the issuance fell 55% to $44Billion last year.

For a related graphic on Global issuance of social bonds, click https://tmsnrt.rs/3JjQZvd

Sage Advisory Services’ Poreda stated that “the lack of social bonds on the market was mostly expected, since the increase in new issuance over recent years had a strong tie to COVID-19 related initiatives.”

Data showed that JPMorgan (NYSE :), BNP Paribas, SA and BofA Securities were three of the most prominent bookrunners in global green bond issuance in quarter 1.