Morgan Stanley and JPMorgan Chase & Co. are piling into Europe’s bond market to raise money, the first Wall Street banks to do so this year as they take advantage of strong funding conditions.

The best start to a year for bond returns is helping fuel an unprecedented debt-sale bonanza by governments and companies around the world of more than half a trillion dollars.

It was supposed to be the silver lining to a year of brutal losses. As bond-fund managers watched the market value of their portfolio decline rate hike after rate hike, one thing was certain: companies would soon have to return to the market offering juicier yields.

U.S. investment-grade debt sales have missed Wall Street estimates for two consecutive weeks with issuers choosing to sit on the sidelines instead of braving volatile markets. Bond sales were expected to pick up this week amid a growing backlog, but seven potential issuers opted to stand down amid broad volatility on Monday.

With volatile markets fraying investors’ nerves, companies are now paying the biggest premiums to sell new bonds since the height of the coronavirus pandemic two years ago.

Governments that had propped up Covid-ravaged economies by issuing social bonds are now turning their attention to longer-term climate goals, while companies are keen for increased flexibility when spending proceeds from sales of environmental, social and governance (ESG) debt. That’s crimping the flow of social notes that typically fund specific projects such as job creation or affordable housing.

Investors in the booming ethical bond market are having to swallow short term losses on the road to improving their green credentials.