The GSS primary market has seen a flurry of activity over the past couple of weeks, after declining to a monthly low in July and seeing no activity in the first half of August; the lion’s share of the 11 transactions (€7.3bn eq.) issued across the last two months, occurred in this period. Given the number of GSS deals on screens, there was limited differential in the oversubscription vs conventional; 2.4x for GSS transactions vs 2.5x for conventional deals.

Senior issuance accounted for the majority of GSS supply (8 transactions / €5.3bn) with covered bonds (3 transactions / €2.0bn) accounting for the remainder. Although currency diversification (GBP, CHF, etc) was prominent pre-summer, all GSS transactions in the last two months have been in EUR.

Green (€5.3bn across 8 transactions) continues to be the label of choice for most financial institutions, but social issuance also remains active, as well as sustainability-linked. 

GSS/S activity declined to its yearly low in July before bouncing back in the second half of August. 2023 YTD total volume is up 24% YoY, representing 80% of 2022 total volumes, driven by exceptionally strong volumes in January, May, and June.

Green issuance (c. €52bn) represents 80% of GSS/S issuance in 2023 YTD – continuing its longstanding dominance and in line with the past few years (c.75% for 2020 & 2021 and 85% for 2022). Social issuance accounts for 16% while Sustainability and SLLB contribute a modest 2% each.

Issuance has been dominated by Senior format, with an equal split between Senior Non-Preferred (36%) and Senior Preferred (35%), followed by Covered (25%), along with a small portion of GSS capital issuance (4%).

European Bank and Insurance GSS/S Supply 2023 YTD

European Bank and Insurance GSS/S Issuance Breakdown 2018-2023 YTD

• EUR Senior: YTD GSS issuance of €42.4bn (+28% vs 2022 YTD), with total senior supply at €197.2bn (+27%); resulting in GSS as a % of total issuance of 21%, which is the same as for 2022 YTD.
• GBP Senior: YTD GSS issuance is £3.5bn (+312% vs 2022 YTD), with total senior supply at £25.8bn (+26%); resulting in an increase of GSS as a % total issuance of 14% (2022 YTD: 4%).
• EUR Covered: YTD GSS issuance of €16.2bn (+19% vs 2022 YTD), with total covered supply at €163.2bn (+13%); resulting in a small increase of GSS as a % of total issuance of 10% (2022 YTD: 9%).
• GBP Covered: YTD issuance is nil (2022 YTD: £0.5bn), with total covered supply at £13.4bn (+8%); resulting in GSS as a % of total issuance of nil (2022 YTD: 4%).

• BMO announced it is providing an innovative new sustainability-linked deposit product to Zurn Elkay Water Solutions. A sustainability-linked deposit links the interest paid on a deposit account to a client’s achievement of defined sustainability targets.
  
• Morgan Stanley announced within its 2022 ESG report that they have reached over $700 billion toward their goal to mobilise $1 trillion in capital for sustainability solutions by 2030. This progress includes over $550 billion towards low-carbon and green solutions.
• Natixis CIB assisted SNCF Group to launch the first Green Bond with a Shared Coupon for the Robert-Debré Child Brain Institute, supported by L’Assistance Publique – Hôpitaux de Paris Foundation. The innovative structure has a nominal value of €300m and will combine the issuer’s ESG objectives with a charitable financial return for investors. Natixis structured and placed the transaction with a limited number of leading French institutional investors.
• ING and European Investment Bank (EIB) have enhanced their long-term partnership by making over €600m available for new loans and leases to small- and medium-sized enterprises in Belgium, the Netherlands and Luxembourg to boost sustainability. This is the eighth joint programme between EIB and ING, through the seven previous programmes, a total of approx. 3,000 companies have been able to access a total of €1.85 billion in finance.
• Standard Chartered and Ant Group have entered into an agreement to strengthen their partnership in driving green and inclusive finance, global fund management and sustainable development.
• Nomura and Angeleno Group have entered into a strategic partnership for clean energy and climate solutions investment. The intention of the partnership is to collaborate on accelerating a transition to a decarbonised global economy through co-investment and sharing of intellectual capital. 

• Goldman Sachs Asset Management (GSAM) has launched two new sustainable bond funds: the Goldman Sachs Global Impact Corporate Bond Fund and the Goldman Sachs USD Green Bond Fund.
  
• BlackRock and the Government of New Zealand are working together to launch a first-of-its-kind climate infrastructure fund in New Zealand to unlock investment to support 100% renewable electricity generation. The goal of the fund is to support New Zealand to become one of the first countries in the world to reach 100% renewable electricity.
• Norges Bank Investment Management (NBIM) has joined the Partnership for Carbon Accounting Financials. NBIM launched its 2025 climate action plan last year, which included a commitment to push companies in its portfolio to align their activities with the net zero emission targets in the Paris agreement. NBIM will also expand its climate risk reporting at the portfolio level.
• Martin Currie, a Franklin Templeton Company, has launched a new social impact fund focusing on well-being, inclusion and the just transition.

• European Securities and Markets Authority (ESMA) has issued a public statement on the sustainability disclosure expected to be included in prospectuses.
  
• Integrity Council for the Voluntary Carbon Market (ICVCM) published its full criteria for assessing categories of carbon credits and crediting methodologies. 
• International Organization of Securities Commissions (IOSCO) formally endorses the International Sustainability Standards Board (ISSB) Sustainability Related Financial Disclosure Standards and called upon member jurisdictions to consider its application.
• International Auditing and Assurance Standards Board (IAASB) has officially launched their consultation on a proposed sustainability assurance standard.

• The Harvard Law School Forum on Corporate Governance has produced a review of ESG ratings in H1, with a view of what to expect for the rest of 2023.
• CDP has produced a report on steering the role of ESG ratings and data products providers, where they recommend that regulators should pursue a common baseline to define ESG ratings and data product.
• S&P have announced that they will no longer be publishing new ESG credit indicators in their reports or updating outstanding ESG credit indicators. 

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 any unfamiliar terms used within this article please refer to our Insights glossary.

1. Includes European Bank & Insurance GSS/S Issuance
2. Source: NatWest Markets Syndicate (01/09/23), includes Global Financial Institutions EUR & GBP Issuance.