Sovereign transition bond comes to market in steady month for GSS SSA activity

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.

27 Mar 2024 . 3 min read

2024 continues to see strong levels of issuance across all sectors, currencies and labels. In February, we saw more than £15bn eq. print (12 transactions) in green, social, sustainability and sustainability-linked (GSS/S) format from SSAs.

SSA GSS/S issuance

GSS/S issuance, while high, has been 8% lower when compared with 2023. Green GSS/S issuance (c. $43bn) represents 42% of GSS/S issuance in 2023 year-to-date (YTD), with a slight lead relative to social and sustainable issuance (28% and 31% respectively). GSS/S issuance in the SSA space is led by Supranationals (35%) followed by Sovereigns (33%) and Agencies / Local Authorities (31%).

SSA GSS/S supply 2022-2024 YTD

Source: Dealogic (01/03/24)

Global EUR/GBP/USD SSA GSS issuance

Sovereign: YTD GSS issuance of $34bn, led by green (70%) followed by sustainable (20%) and social issuance (10%).
Supranationals: YTD GSS issuance of $35bn, led by sustainable bonds (61%) followed by green (28%) and social issuance (11%).
Agencies / Local Authorities: YTD GSS issuance of $32bn, led by social (59%) followed by green (28%) and sustainable issuance (13%).

GSS/S private placements

The Inter-American Development Bank (IDB) priced a new 15-year fixed-rate Sustainable Development Bond in Australian Dollars, to support IDB’s strategic priorities to promote sustainable growth, reduce poverty and inequality, and tackle climate change in Latin America and the Caribbean. Fukoku Mutual Life Insurance Company is the sole investor of the bond. With this bond, IDB raises awareness for the Sustainable Development Goals, including projects supporting women’s maternal health.

SSA sector developments

Glasgow Financial Alliance for Net Zero (GFANZ) has partnered with Brazil to deploy collaborative projects aimed at supporting Brazil to deliver its climate finance priorities and climate goals.
The Government of Canada successfully priced its second green bond and their first to include nuclear energy expenditures as an eligible use for proceeds. The bond saw strong demand with nearly 2x oversubscription, and socially responsible investors representing nearly two thirds of buyers.
The Government of Japan successfully launched its Transition bond programme with c. JPY1,600bn (USD eq. 10.6bn) raised through a 10-year and 5-year auction of the bond (2.9x and 3.4x oversubscription respectively). The oversubscription was slightly lower than typical volumes seen for similar auctions due to the potential Bank of Japan (BOJ) shift on rate policy.

Investor developments

BlackRock has been mandated to manage investments on behalf of Nest. Investments will focus on transition and sustainable outcomes, with the scheme expected to invest £5bn by 2030.
BNP Paribas AM launched ESG active fixed income exchange traded funds (ETFs) with the rollout of the BNP Paribas Easy Sustainable EUR Corporate Bond and BNP Paribas Easy Sustainable EUR Government Bond ETFs.
Fidelity International announced a new focused sustainable investment approach, targeting four systematic themes: nature loss, climate change, strong and effective governance, and social disparities.
Invesco joined JPM IM, State Street and PIMCO in departing from the Climate Action 100+.

Government and regulatory developments

The California Energy Commission has announced an approved plan to invest $1.9bn through 2027 on projects to expand infrastructure for zero emission buses (ZEB) and transportation, including EV charging and hydrogen refuelling networks.
The SEC has officially approved climate-related disclosure rules for US public companies, requiring companies for the first time to include information on climate risks they face and plans to address them.
Enterprise Singapore has launched a sustainability reporting grant in light of the new climate reporting disclosure standards mandated in Singapore. The grant will provide funding support up to 30% of the qualifying costs in the preparation of their first sustainability report.

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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