The UAE and Saudi Arabia are on track to remain the largest issuers of sovereign green bonds in the region in 2024, according to a recent S&P Global report (pdf). This will be driven by both government bodies and state-owned companies looking to meet net zero targets, the report said.

Green, social, sustainability, and sustainability-linked bond (GSSSB) issuance in the Middle East reached a record USD 23 bn in 2023, doubling since 2022. This represents less than 3% of global issuance.

Sustainable sukuk issuances are expected to grow amid increasedinvestor demand and efforts by Islamic finance countries to reduce carbon footprints, S&P said.

Most bond proceeds go towards renewable energy and hydrogen projects in the region, the report said. Investments in projects addressing water scarcity and heat waves are also anticipated to continue to drive issuance this year, the report added, cautioning that the extent of progress largely hinges on the pace of decarbonization strategies.

The global stocktake: On a global scale, sovereign issuance is poised for another uptick in 2024, with S&P Global forecasting issuances to reach between USD 950 bn and USD 1.1 tn, propelled by robust national sustainability commitments and external backing. Issuances came in at USD 980 bn in 2023, with notable contributors like the UK, Germany, and Italy each surpassing USD 10 bn in issuances.

Out of all GSSSB issuances, green bonds will continue to reign supreme amid growing demand for environmental projects.

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