This article was jointly written by Jonathan Gardiner, Sustainable Indices Product Manager at Bloomberg & Joshua Kendall, Head of Sustainable Fixed Income at Bloomberg.
Sustainable bond issuance rebounded in the first quarter of 2023, following a challenging 2022. This signals the overall decline observed last year is not a continued trend. Corporate and Government new bond issuance finished the quarter up 21.1% YoY.
Total impact (defined as green, social, sustainability and sustainability-linked) bond issuance year-to-date is approximately $278bn. The quarterly volumes were bolstered by a surge in government issuance, the most significant trend, accounting for nearly 50% of the total. Green bonds remain the majority of sustainable debt issuance, with $172bn issued in the first quarter of the year.
Green bond markets received no shortage of media coverage. The long-awaited EU Green Bond Standard reached provisional agreement, which if adopted, will result in more stringent disclosures from green bond issuers. Green bond funds are currently one of the few remaining products being labeled as Article 9, an EU-designated label for locally marketed and distributed investment strategies, following significant downgrades of funds to Article 8 in recent months.
Investor demand remains strong for sustainable debt, recently observed with Volkswagen’s green note. The €1.75bn offering was more than 3.5 times oversubscribed as well as being the first non-financial corporate bond offering in the region since Credit Suisse Group AG’s rescue deal, according to data compiled by Bloomberg.
Issuance of sustainable bonds in March is down compared to January and February, but overall issuance is comparable for the same period last year. Q1 2023 issuance is the 3rd highest quarter issuance observed, and 10% below that of the highest recorded quarter in Q1 2021 . EMEA continues to dominate the regional issuance volumes, accounting for approximately 50% of total issuance in Q1.
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 3.67%, some 66 bps above that of the Global Agg Index, highlighting additional returns for investors with an appetite for sustainability-focused investment.
Summary of total GSS issuance YTD (includes Gov, Corp, Muni & Mtgs)
Visit I<GO> on the Terminal or browse our website to find out more about Bloomberg’s Sustainable Indices and request a consultation with an index specialist.
Bloomberg
Source link
