This article was written by Jonathan Gardiner, Sustainable Indices Product Manager, and Tom Freke, ESG Data Specialist, at Bloomberg.
Sustainable bond issuance continues its upward trend in 2023, as Corporate and Government new bond issuance increased by 16.9% compared to the same period last year.
Total impact (defined as green, social, sustainability and sustainability-linked) bond issuance year-to-date is approximately $370bn. Government bonds still account for the majority of issuance. Total issuance for the month of April is $83.4bn, with green bonds accounting for $53bn of the monthly figure.
Germany sold one of the year’s biggest green bonds in April, a €5.25bn 10-year security. As with other green German sovereign bonds, the security is twinned with a non-green transaction that has a matching maturity. This allows for a simple comparison in pricing between the two – what is sometimes known as the ‘greenium’ – and in this case the new green bond priced just half a basis point inside its twin.
The green bond’s slender price advantage was less than seen on other German green issues. In August 2022, the green twin priced 1.25 bps inside the non-green security.
Germany’s transaction came a week after a 3 billion-euro green bond from Austria. Orders for that 2029 security were more than twice the final size of the deal. The green security’s cover ratio was substantially larger than Austria’s 2053 non-green note sold on the same day.
Bloomberg’s Global Aggregate Green, Social and Sustainability (GSS) bond indices (webinar link) provide investors with an objective and robust measure of the global market for fixed income securities issued to fund projects with direct environmental and/or social benefits. The year-to-date return for the GSS index is 5.09%, some 163 bps above that of the Global Agg Index, highlighting continued additional returns for investors with an appetite for sustainability-focused investment.
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