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Sustainable Bonds Insight 2020 Sustainable Bonds Insight Contents Sustainable Bonds Insight 2020 Sustainable Bonds Insight Contents 1 Introduction 20 Issuer types 2018 vs 2019 39 The Japanese green, social and sustainability bond markets 2 Largest green and social bonds in 2019 21 Bond issuance by quarter 2016 to 2019 40 The Emerging Markets green, social and sustainability bond markets 3 Largest social and sustainability bonds in 2019 22 Lead manager league table 41 Countries joining the green, social and 4 23 External reviewer share of the green, Top 5 largest issuing countries in 2019 sustainability bond markets in 2019 in the green bond market social and sustainability bond market 42 From brown to green: financing 5 24 Sustainable Development Goals Top 5 largest issuing countries in 2019 the sustainability transition in the social bond market 25 Supporting more shades of 45 Bringing transparency to green 6 Top 5 largest issuing countries in 2019 Green bonds in Latin America and the in the sustainability bond market Caribbean 28 A greater role for green bonds 7 A strategic approach to sustainable finance 48 Nasdaq sustainable bond network 31 Voicing its opinion 10 The roadmap for KPI-linked 51 Sovereigns, sustainability and bonds in 2020 CRR: Looking ahead to 2020 13 Ambassador for greener capital 34 Green buildings and green 55 The 2020s – The decade of markets bonds sustainable bonds 37 Currencies used in 2018 vs 2019 58 Spearheading green finance 16 Financial markets move towards in the green bond market Transition financing in Asia and beyond 38 The European green, social and 61 Market predictions for 2020 sustainability bond markets 19 Annual issuance in the green, social and sustainability bond markets www.environmental-finance.com Introduction Sustainable Bonds Insight 019 was a pivotal year for the green, social and The transaction was significant because in recent years Enel sustainability bond market. has issued numerous bonds with a green label, with the use of 2 The value of issuance for all three markets combined proceeds allocated to green projects, as recommended by the rose to $321 billion in 2019, up 52% on the previous year. GBPs. Cumulative issuance is set to pass the $1 trillion mark in But this time it chose a different format – one in which the 2020. proceeds were used for general corporate purposes, rather than An online poll conducted by Environmental Finance being allocated to dedicated green projects. And the coupon suggested that the market is expected to continue to grow this will rise by 25 basis points if the company fails to hit a target year. Most respondents thought the value of issuance is likely of generating 55% of its capacity from renewables by the end to exceed $350 billion. of December 2021. But it is not the growth of the market that made 2019 a The format of the bonds is similar to that seen in the pivotal year. To my mind, what was noteworthy in 2019 was flourishing sustainability-linked loans market, where the the change in the tone of discourse in the market. interest rate on a loan hinges on some kind of predetermined There has been a vigorous – and in my view very healthy sustainability target. – debate in the market, asking: “What is the market trying to As readers of Environmental Finance will know, Enel’s achieve, and what is the best way to achieve it?” issue received a mixed reception in the green bond market. Peter Cripps, Editor, Environmental Finance This has manifested itself in numerous ways. Axa Investment For example, one green bond fund manager labelled it as Managers in June drafted a set of guidelines for transition greenwashing, describing it as “an option on Enel failing to bonds. The asset manager argued that this type of label may be meet its renewables targets”. needed to accommodate issuers from ‘brown’ sectors, such as But others were more welcoming. They see this format oil and gas, which lack the green assets to issue a green bond, as exciting because it directly links an issue with the issuer’s but which nonetheless have an important role to play in the sustainability goals, which can help incentivise it to make the transition to a low-carbon economy. transition to a low-carbon business model. This comes after a number of issuers from such sectors, ICMA in January 2020 set up a working group to explore including Repsol and Snam, tapped the green bond market the concept of ‘sustainability/key performance indicator-linked but attracted a mixed response from investors. bonds’. The discussion on transition bonds is still going on, with a So, 2019 was an interesting year for the market. But I think working group on ‘climate transition finance’ established by 2020 will be even more interesting. the International Capital Markets Association (ICMA), which The market has achieved much over the past decade, mainly administers the Green Bond Principles (GBPs). in terms of building awareness and knowledge about green Credit Agricole in November issued a transition-labelled concerns with the financial community, including what are bond, in a private placement that was bought by Axa IM. The appropriate projects, targets and metrics. European Bank for Reconstruction and Development also But there is growing consensus that, as the climate emergency issued a green transition bond. deepens, there needs to be urgent transition towards a low- But others in the market think that no such label is needed, carbon economy, and the green bond market needs to lead this, For enquiries about the data in this Insight, and that the green label should accommodate these issues. if it is to stay relevant and meaningful. or about www.bonddata.org, please contact Another important event in the market’s development came I am pleased to see that, at least, the right questions are being [email protected] when Italian utility Enel in September issued a bond that bears asked and there is appetite for reform. a ‘Sustainable Development Goals-linked’ label. www.environmental-finance.com 1 Sustainable Bonds Insight Largest in 2019 The largest deal and issuers of the year The largest deal and issuers of the year in the green bond market in the social bond market Largest Single Green Bond Largest Supranational Largest Single Social Bond State of the Netherlands IBRD CAFFIL Value: €5,985 M ($6,680 M) Value: $4,009 M Value: €1,000 M ($1,131 M) Largest Corporate Largest Issuer Largest Issuer Engie Nederlandse Fannie Mae Value: $4,666 M Waterschapsbank NV Value: $23,782 M Value: $2,280 M Largest Agency Largest Financial Institution Latest Agency Fannie Mae ICBC Nederlandse Number of Deals: Value: $5,966 M Waterschapsbank NV 993 Number of Deals: 3 Largest Municipal Largest Sovereign Largest Supranational Federal State of NRW Council of Europe State of the Netherlands Value: $2,767 M Number of Deals: 1 Development Bank Value: $560 M 2 www.bonddata.org Largest in 2019 Sustainable Bonds Insight The largest deal and issuers of the year in the sustainability bond market Largest Corporate Largest Single Sustainability Bond Largest Supranational East Nippon Federal State of NRW IBRD Expressway Value: €2,250 M Value: $3,705 M Value: $1,387 M ($2,547 M) Largest Corporate Largest Municipal Largest Issuer Enel California Health Value: $1,500 M IBRD Facilities Financing Value: $3,705 M Authority Value: $500 M Largest Financial Institution Latest Agency BNG Bank T Corp Value: $1,831 Largest Financial Institution Value: $1,230 M Cassa depositi e prestiti Spa Largest Municipal Value: $849 M Largest Sovereign Federal State of NRW Republic of Korea Value: $2,547 M Value: $500 M www.bonddata.org 3 Sustainable Bonds Insight Top 5 largest issuing countries in 2019 in the green bond market For the third consecutive year, the US, France and China were the three biggest issuing countries. China $27,004.4 M USA $58,995.8 M Largest deals Largest deals ICBC (USD, HKD) $3,011.3 M Apple EUR 2,000 M $2,215.2 M China Three Gorges CNY 20,000 M $2,977.8 M* Bank of America (USD) $2,000 M China Industrial Bank CNY 20,000 M $2,907.6 M* Citigroup EUR 1,000 M $1,137 M Largest issuers Largest issuers ICBC $5,966.3 M Fannie Mae $23,782 M China Three Gorges $2,977.8 M MidAmerican China Industrial Bank $2,907.6 M Energy Company $2,350 M France $31,357.5 M The Netherlands $15,910.7 M Germany $22,549 M Apple $2,215.2 M Largest deals Largest deals Largest deals Société du Grand Paris EUR 2,000 M $2,248 M State of the Netherlands EUR 5,985 M $6,680 M KfW EUR 3,000 M $3,366.7 M Republic of France EUR 1,896 M $2,127.6 M TenneT EUR 1,250 M $1,394.5 M Federal State of NRW EUR 2,500 M $2,766.5 M Republic of France EUR 1,737 M $1,965.8 M ABN AMRO EUR 750 M $847.2 M KfW (USD) $2,000 M Largest issuers Largest issuers Largest issuers *USD conversion taken from pricing date Republic of France $5,938.2 M State of the Netherlands $6,680 M KfW $9,042.6 M resulting in variation in USD value Engie $4,666.4 M TenneT $1,963 M E.on $3,336.5 M Methodology: Deals from supranational entities Société du Grand Paris $3,619.1 M ABN AMRO $847.2 M Federal State of NRW $2,766.5 M have not been included in individual countries. 4 www.bonddata.org Top 5 largest issuing countries in 2019 Sustainable Bonds Insight in the social bond market France, Japan and the Netherlands are the three biggest issuing countries in the social bond market.
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