Sustainable bond issuances in the Middle East reached approximately $16.7 billion in the first nine months of 2024, according to the latest report from S&P Global Ratings.
The amount marked an 18% decline in sustainable bond issuance over the first nine months of this year, compared to the same period in 2023. S&P Global Ratings attributed the slow down to “higher interest rates and some normalizing from the halo effect of COP28 in November 2023”.
The company also stressed the need for accelerated implementation of net-zero policies, which could stimulate further issuance despite existing government initiatives and an increasing alignment with sustainability regulations.
The company estimated that sustainable bonds contribute to 15%-20% of total bond issuances (excluding sovereigns and private placements) in the region, higher than global levels of 12%-14%.
Moreover, given that 35%-40% of the issuances in the region this year were propelled by private placements and domestic issuances, including these amounts, “the share of sustainable bond issuance in the region drops to 10%-15%”.
UAE and KSA lead on climate finance
The report anticipates that the UAE and Saudi Arabia will continue to lead the sustainable bond market in the region, even as other Middle Eastern nations such as Qatar show increased activity in this sector.
Issuances in the UAE are “more diversified by issuer type than those in the rest of the region”, the report found, but “financial institutions are prevalent across the board this year”.
The UAE financial sector has pledged to mobilise Dh1 trillion ($272 billion) in sustainable finance by 2030 as a key factor for issuances in the sector. In addition, large entities, including those attached to the government are also leading on sustainable issuances.