In the green bond market last year the Luxembourg Stock Exchange was the most popular listing venue and French bank Crédit Agricole was the largest underwriter globally.
The Climate Bonds Initiative’s 2019 Green Bond Market Summary said LuxSE listed $19.8bn (€18bn) worth of deals last year.
The report said: “11% of the deals listed on LuxSE’s platform are Certified Climate Bonds, including a sovereign bond by Republic of Chile (€861m). The German Stock Exchanges combined took second place, followed by Euronext Paris.”
Other exchanges also launched green finance initiatives last year.
The London Stock Exchange launched its Sustainable Bond Market last October. The market included the green bond segment, which the exchange had launched in 2015, with new segments for social and sustainability bonds, and a new issuer segment for bonds by firms whose core business is aligned with FTSE Russell’s Green Revenues Taxonomy.
The following month Euronext announced the creation of a new offering which combined green bonds from six regulated markets in one dedicated section.
https://twitter.com/euronext/status/1222444228048896000
Last December Nasdaq also launched the Sustainable Bond Network which aims to increase transparency and accessibility to environmental, social and sustainability bonds globally.
https://twitter.com/NasdaqCorpGov/status/1220474887556550661
Underwriting
Crédit Agricole was the largest green bond underwriter globally last year with $10.6bn, just ahead of BNP Paribas with $10.5bn and HSBC with $10.1bn.
https://twitter.com/CA_CIB/status/1224644243211345921
The top three underwritten green bonds by Crédit Agricole include deals from Italian energy company Enel ($1.3bn), Crédit Agricole ($1.1bn) and Republic of Chile ($972m) according to the study.
“The top three underwriters account for 17% of the total underwritten amount,” said the report.
Volumes
The Climate Bonds Initiative said green bond issuance was a record last year.
https://twitter.com/LuxembourgSE/status/1225698475808940034
The report said volume last year was primarily driven by Europe, which made up nearly half, 45%, of global issuance.
“In 2019, the total amount of green bonds issued in Europe increased by 74% (or $49.5bn) year-on-year, reaching a total of $116.7bn,” added the study.
Asia-Pacific and North American markets accounted for 25% and 23% of global issuance respectively.
“With debut green bond issuances from Barbados, Russia, Kenya, Panama, Greece, Ukraine, Ecuador and Saudi Arabia, the market saw further geographic diversification,” added the report. “This is particularly welcome as all the new entrants are from emerging markets.
https://twitter.com/ClimateBonds/status/1224259878316888064
In addition, green bonds from non-financial corporates almost doubled from $29.5bn in 2018 to $59.3bn last year.
SDG-linked bonds
The study continued that the first bond linked to the United Nations’ Sustainable Development Goals was issued last year by Enel.
“While the use of proceeds is aimed at general corporate purposes, the new instrument requires Enel to measure its performance against several environmental and social key performance indicators and dependant on whether they are achieved, to pay up to 25 basis points more in the coupon to bondholders,” added the report.
Social bonds
The volume of social bonds also grew 41% last year over 2018 to $20bn.
“Adding social bonds to green and sustainability volumes yields an annual total of $342.8bn, 69% above 2018 volumes,” said the report.
This month BNP Paribas and the European Investment Fund launched a €10m fund to co-invest in social impact bonds in the European Union.
https://twitter.com/BNPParibas/status/1223256886214057985
The bank said that in a social impact bond, investors pre-finance social innovation projects through a contract that sets ambitious social impact targets, previously negotiated with the public authorities. If these targets are met, the public authorities will pay back investors proportionally to the social impact generated (including a success fee). If the social objectives are not achieved, investors may not be reimbursed.
Paolo Gentiloni, European Commissioner for the Economy, said in a statement: “Already we have witnessed refugees in Finland being re-skilled and matched into jobs; and former military personnel being reintergrated into the workforce in the Netherlands. With this new SIB fund set up by BNP Paribas and the European Investment Fund, children and young people are already being protected, nurtured and encouraged to strive for more.”