More than 680 green bonds and 130 social bonds issued globally so far in 2020
- Social bond issuances raised more than $163 billion this year thus far, more than 10 times the $13 billion raised in 2019
- Green bonds alone raised $227.6 billion in 2020 thus far, already surpassing the $188.3 billion for the whole of 2019
- France ($49.8 billion) closely followed by those in Luxembourg ($49.6 billion) dominated the global social bonds market with each country cornering a third of the market
- The European Union has become the world’s largest issuer of social bonds in 2020
A total of more than 680 green bond issuances have been launched globally so far since the start of the year raising a total of $227.6 billion, according to *research by global law firm Linklaters. Green bonds finance environmentally friendly projects, including energy efficiency, pollution prevention, clean transportation and new green technologies.
The data also revealed that 138 social bond issuances have so far raised in excess of $163 billion this year – which is already more than 10 times the full amount in 2019 which stood at $13 billion. Social bonds finance socially beneficial projects which seek to address or mitigate a specific social issue, including affordable basic infrastructure, access to essential services, affordable housing, employment generation and socio-economic advancement or empowerment.
Richard O’Callaghan, Capital Markets partner at Linklaters, commented:
“2020 has already surpassed what was then a record-breaking 2019 which raised $188.3 billion in green bonds. The sharp rise in social bond issuance clearly demonstrated that rather than dampen enthusiasm for the asset class, the pandemic contributed to the growing interest among investors. Social bonds emerged as a useful tool in the fight against the pandemic by mitigating the socio-economic impact of the crisis. This had a particular appeal to a fast-growing base of socially-concerned investors.”
Germany and Sweden top green bond proceeds and issuances
Sweden (92), Japan (77) and Germany (69) were the top three green bond issuers this year. Germany raised $37 billion followed by US and France at $30.7 billion and $25.3 billion.
France and Luxembourg see the largest amount of social bond proceeds, with Japan reaching the top in terms of number of social bond issuances
At the top of the table, issuers in France raised $49.8 billion closely followed by those in Luxembourg ($49.6 billion) - with each country cornering a third of the total global social bonds market. Luxembourg recorded a number of very large social bonds, almost entirely down to several very large transactions issued by the European Union and the European Investment Bank this year. Japan ($8.8 billion) led the tally with 40 social bond issuances. The US ($8.6 billion) saw 27 issuances and France 19.
Amrita Ahluwalia, Capital Markets lawyer at Linklaters, commented:
“Green and social bonds have become arguably some of the most popular asset classes this year. The trend is set to continue as we begin to see more evolved variations of the product with the emergence of sustainability-linked bonds which go beyond the traditional use of proceeds model. These products derive their popularity from investors who are keen to align their investment strategies to a more sustainable future.”
Linklaters has been at the forefront of the growth in the green bonds market, advising on some of the leading offerings in recent years, Russian Railways (Russia and the Commonwealth of Independent States’ first), Link Real Estate Investment Trust (the world’s first green convertible bond in the real estate sector), the Government of Hong Kong (its inaugural US1bn Green Bond, listed on both the London Stock Exchange and the Hong Kong Stock Exchange), Egyptian Ministry of Finance (the first sovereign green bond in the Middle East and Africa region, listed on the London Stock Exchange (LSE) and admitted to the LSE’s dedicated Sustainable Bond Market) and DTEK Renewables (the first ever green bond issuance by a Ukrainian issuer).
Linklaters advised the underwriters on the largest-ever social bond issued by the European Commission (‘the Commission’). At €17 billion, the Commission’s inaugural Covid-related social bond is the largest ever bond issuance under the EU SURE programme – the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency. The transaction also recorded the largest-ever order book for a bond sale across any sector, with demand reaching €233bn – nearly 14 times the amount the Commission aimed to raise from the issuance.
Linklaters has also led the development of the related sustainability-linked bond market, advising on recent issues by LafargeHolcim (the first of its kind in the building materials industry), Schneider Electric (on its inaugural issue of sustainability-linked convertible bonds, the first ever sustainability-linked deal in the equity-linked market), Suzano (the first bond of its kind to be aligned with the ICMA’s sustainability-linked principles published in June 2020), Novartis (the first sustainability-linked bond to incorporate social rather than environmental targets and the first offering of sustainability-linked bonds in the healthcare sector) and ENEL (the first sustainability-linked bond in Europe).
Linklaters’ green, social and sustainability bond practice and experience spans its European, North American and Asian offices and draws on the support of the firm’s market-leading corporate, environment and climate change, energy and financial regulation practices.
*Data source : Refinitiv