Iceland erupts into green bond market as latest European sovereign green bond issuer

In our monthly Sovereign, Supranationals and Agencies (SSA) sustainability newsletter we breakdown the trending ESG trades and themes, helping SSAs get ahead of the latest issues shaping the market.

24 Apr 2024 . 3 min read

2024 continues to see strong levels of issuance across all sectors, currencies and labels. In March, we saw over £14bn eq. print (12 transactions) in Green, Social, Sustainability and Sustainability-Linked (GSS/S) format from SSAs.

SSA GSS/S issuance

GSS/S issuance in Q1 2024 has seen nearly identical volumes to those in Q1 2023. Green GSS/S issuance (c. $57bn) represents 45% of GSS/S issuance in 2024 year-to-date (YTD), with a slight lead relative to social and sustainable issuance (24% and 31% respectively). GSS/S issuance in the SSA space is led by Supranationals (37%) followed by Sovereigns (33%) and Agencies/Local Authorities (30%).

SSA GSS/S supply 2022-2024 YTD

Global EUR/GBP/USD SSA GSS issuance

Sovereign: YTD GSS issuance is $42bn, which is largely made up of green issuance, with a select few issuers in non-green formats e.g. Mexico, Colombia and Chile.
Supranationals: YTD GSS issuance is $47bn, led by sustainable bonds (53%) followed by green (38%) with social issuance lagging (9%).
Agencies / Local Authorities: YTD GSS issuance is $38.6bn, led by social (58%) followed by green (28%) with sustainable issuance lagging (15%).

SSA sector developments

Iceland successfully issued their inaugural green bond – a €750m 10-year bond. The transaction saw 280 unique investors place orders that amassed to a final orderbook size of over EUR7bn.

South Korea pledged £313bn towards green financing, aiming to slash greenhouse gas (GHG) emissions by 40% from 2018 levels by 2030; building on ongoing momentum from Asian countries focused on climate-related issues e.g. Japan and Singapore.

Saudi Arabia recently published their Green Financing Framework, aimed at helping the kingdom to achieve the Saudi Vision 2030 goals, which focuses on a more sustainable future, starting from policies and investment development to planning and building infrastructure.

France and Brazil have announced $1.1bn in initiatives aimed at preserving the Amazon rainforest, involving contributions from both private and public funds over a four-year life span.

Investor developments

Robeco have announced a new sustainable engagement with the Swiss Association for Responsible Investments, an alliance of major Swiss pension and social security funds managing more than CHF300bn.
Mirova continue to focus on nature-related themes after successfully raising more than €195m for their Climate Fund for Nature.
A recent report by Deloitte and the Fletcher School surveyed over 1,000 asset owners to investigate how approaches to sustainability have developed. The report found that 79% of investors currently have a sustainability policy in place.

Government and regulatory developments

The EU’s Nature Restoration Law failed to reach sufficient support from member states to enable its approval. This legislation included a mandated target for EU countries to implement measures to restore at least 20% of the EU’s land and sea areas by 2030, and for all ecosystems in need of restoration by 2050.
The UK Finance Ministry announced it will provide regulation for ESG ratings providers to improve clarity and trust in these benchmarks, with a full consultation response and legislative plan to come later in 2024.

Find out more

If you would like to discuss any of the above further, please contact our authors:

Manmeet Baryah, Analyst, Climate and ESG Capital Market
Tonia Plakhotniuk, Vice President, Climate and ESG Capital Markets

For further analysis and information on the primary and secondary markets, read the full monthly newsletter on Market Insights. If you do not have access to Market Insights, please contact us. Also, for any unfamiliar terms used within this article please refer to our insights glossary.

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