GSS primary issuance fell for a second straight month since January’s explosive start with €4.6bn printed across nine transactions – most of which came from infrequent GSS issuers. Limited deal sizes and overall scarcity resulted in low to nil New Issue Premium (NIPs) as well as higher average oversubscription (o/s) for GSS trades (3.8x, +0.3x vs conventional). Looking forward, we expect April to remain relatively muted, in part driven by blackouts.

GSS activity has been somewhat muted in 2024 – down 15% vs 2023 year-to-date (YTD) – but nevertheless represents a solid 28% of 2023 volumes. Green issuance (c. €22bn) represents 88% of GSS issuance in 2024 YTD; continuing its longstanding dominance to an even greater extent vs the past few years (80% in 2023 and 85% for 2022). Social issuance is at 10% followed by sustainability at <3%. Covered format (38% market share) is the only structure that has witnessed growth so far this year, up 35% year-on-year (YoY) vs 2023 YTD, however, this is more than offset by a decline in senior issuance, which is down by 29% in 2024 YTD. Senior Preferred and Senior Non-Preferred hold a 34% and 26% share respectively, with GSS capital issuance accounting for 2% of sector GSS volumes).

European Bank and insurance GSS/S supply 2023-2024 YTD

European bank and insurance GSS/S issuance breakdown 2019-2024 YTD

• EUR Senior: YTD GSS issuance is €14.3bn (-27% vs 2023 YTD), with total senior supply at €102.7bn (+1%); resulting in a material decrease of GSS as a % of total issuance to 14% (2023 YTD: 19%).
• GBP Senior: YTD GSS issuance is nil vs £1.1bn in 2023 YTD, with total senior supply at £6.9bn (-52%); resulting in GSS as a % total issuance of nil.
• EUR Covered: YTD GSS issuance is €8.5bn (+13% vs 2023 YTD), with total covered supply at €78.0bn (-13%); resulting in a +3 percentage points increase in GSS as a % of total issuance to 11% (2023 YTD: 8%).
• GBP Covered: YTD issuance is nil, which is same as 2023 YTD, with total covered supply at £5.0bn (-23%); resulting in GSS as a % of total issuance of nil.

BNP Paribas announced a Research & Development (R&D) partnership with environmental intelligence firm Kayrros. The partnership will enable BNP Paribas to deepen its understanding of the methane footprint of the oil and gas industry and develop advanced portfolio-level methane metrics.

NatWest Group launched an ambition to provide £5bn lending to the UK social housing sector between 1 January 2024 and year-end 2026. The lending should help the housing associations sector to deliver a pipeline of new homes and improve living conditions in existing properties, thus improving the availability and quality of social housing in the UK.

CaixaBank launched the AgroBank Hub, which is a digital platform that seeks to transform the way in which the bank's customers and non-customers interact with the agri-food sector. AgroBank Hub integrates four vertical areas: current information, agricultural solutions, a marketplace with specialised products and services and a community for developing an ecosystem of innovation, training and entrepreneurship.

UniCredit announced it has become a co-founding member of the Venice Sustainability Foundation. As part of its membership the bank will advise on areas ranging from green transition to social inclusion.

Lloyds Banking Group announced a partnership with Projects for Nature. The partnership includes a £250,000 donation to fund three nature projects in England with the aim to restore nature and engage communities to address national nature recovery priorities.

ABN AMRO has invested in Nordic Alpha Partners Fund II, which focuses on investing in the scaling of green tech companies in the Nordic and DACH regions. ABN AMRO has also set aside €1bn to invest in early-stage capital in a range of direct investments, fund investments and hybrid capital.

Royal London Asset Management announced its first investment into agriculture and natural capital by acquiring 21,000 acres of prime farmland in a £260m joint venture with South Yorkshire Pension Authority.

The European Securities and Markets Authority (ESMA) launched a consultation on the draft regulatory technical standards related to the registration and supervision of external reviewers under the EU Green Bond Regulation. ESMA will consider all comments received by 14 June 2024 and will submit the draft Regulatory Technical Standard (RTS) and Implementing Technical Standards (ITS) to the European Commission by 21 December 2024.

The Securities and Exchange Commission has adopted rules that will require companies to disclose certain climate-related information to enhance and standardise climate-related disclosures for investors.

The Net-Zero Banking Alliance (NZBA) has published new guidelines for climate target setting for banks. For the first time, the scope of targets will extend to include banks’ capital markets activities and the new guidelines will also add, update, and clarify technical language.

Morningstar has announced the launch of the Morningstar Low Carbon Transition Leaders (LCTL) Indexes. The new indexes will help investors target a broad range of companies that are leading their sector peers in their readiness for the climate transition.

ISS ESG announced a new scenario analysis dataset within its suite of climate solutions. The new dataset covers around 30,000 issuers and will help investors assess a portfolio’s alignment with up to 22 scenarios provided by leading public pathways.

As always, if you would like to discuss any of the above further, please reach out to our authors:

Caroline Haas, Head of Climate and ESG Capital Markets

Doug Shuffman CFA, Vice President, Climate and ESG Capital Markets

Jake Hallam, Vice President, Climate and ESG Capital Markets

Pulkit Khurana, Associate, Climate and ESG Capital Markets

Siobhan Wartnaby, Analyst, Climate and ESG Capital Markets

*For further analysis and information on the Primary Market, take a look at the full monthly newsletter on Market Insights. If you do not have access to Market Insights, please contact us here. Also, for any unfamiliar terms used within this article please refer to our insights glossary.

Additional information

1.  Includes European Bank & Insurance GSS/S Issuance
   
2.  Source: NatWest Markets Syndicate (3 April 2024), includes Global Financial Institutions EUR & GBP Issuance.