The green bond market is teeming with new investors, and issuers are expanding supply on all fronts – issuing ever-riskier types of debt under a green label, and causing some observers to ask whether the market is growing in the right direction.

Northern Trust and BondEvalue have completed the first trade of a fractionalized blockchain-based bond.

Many companies have been turning to convertible bonds to keep ahead of their competitors during coronavirus, says Justin Craib-Cox, RWC Convertible Bonds fund manager. 

Morgan Stanley Investment Management is bidding to address a lack of bond funds on the market that deliver on both ESG and returns, with the launch of two new sustainable fixed income funds.

Asset managers say it is time to embrace riskier fixed-income assets again, with emerging markets bonds becoming an increasingly attractive option for investors as optimism wanes over a quick economic recovery in developed markets.

Concern is growing over a likely spike in defaults among so-called ‘zombie’ companies that have stayed afloat during the coronavirus pandemic by relying on government stimulus and increasing their debt loads, but will struggle to keep servicing loans as government schemes roll back.

Fixed income managers have seen a hectic first half of the year in 2020. In the US, a typical year’s worth of new issues was printed in the space of just four months, as the onset of the pandemic forced companies to take urgent action to shore up their finances.

Green bonds are predicted to surge after EU leaders agreed an unprecedented EUR750 billion coronavirus recovery package, 30 per cent of which will be allocated to climate-friendly projects. Analysts at ratings agency S&P say it could boost the size of the global green bond market by some 90 per cent.

Green Ash Partners, part of the Woodman Group, has launched its inaugural sustainable short duration credit fund. 

Global exchanges are making the most of growing investor demand for sustainable products and ramping up their provision of ‘green’ bonds, making them the most commonly offered ESG investments for the first time, according to The World Federation of Exchanges’ (WFE) sixth annual sustainability survey.