全球绿色债券定价报告：2021年下半年-气候债券倡议组织

GreenBondPricinginthePrimaryMarket:July-December20211

GREEN

INTHE

BOND

PRIMA

PRICI

RYMAR

NGKET:

202

H2(Q3

1

-Q4)

July-Dece

mber2021

Reporthigh

lights

•Sampleincludes73withacombinedfacepricedbetweenJuly(H12021).

•Greenbondsinbothperformedwellonal

greenbonds

valueofUSD71.8bnandDecember2021

EURandUSD

lmetricsinthe

•TheSovereignGreen

primarymarket,ona•Halfofbondspriced

theiryieldcurves.

•Allocationstogreeniat66%.

verage.

withagreeniumoron

nvestorsremainstable

BondClub:four

issuersaddedsixnew

•GreenBondETFs–T

bondETFsreachesUislaunched.

bonds.

otalassetsingreenSD1.4bnasninthfund

BenchmarkSpread

AssetSwapSpread

Introduction

Thisisthethirteenthreportinourpricingseries,inwhichweobservehowgreenbondsperformintheprimarymarkets.Thisreportincludesbondsissuedinthefinalsixmonthsof2021(H22021).

OurmethodologyisdesignedtocapturethemostliquidportionofthegreenbondmarketandisthuslimitedtoUSDandEURbondswithaminimumoriginalissuesizeofUSD500m.Developedmarket(DM),emergingmarket(EM)andsupranationalissuers(SNAT)areincluded

.1

Thefullmethodologyisexplainedonpage25.

Duringthisperiod,USD240bnworthofgreenbondswasaddedtotheClimateBondsGreenBondsDatabase,themostinanyhalfyear.AttheendofJanuary,ClimateBondsconfirmedthatUSD517.4bnofgreenbondshadbeenaddedin2021,breakingthehalftrillionmarkforthefirsttime,andmarkingthetenthconsecutiveyearofgrowth.Thispaperincludes30percentoftheamountissued

inH22021,thatmettheaboverequirements(USD71.8bn),splitbetween73greenbondsfrom61issuers.EURwasthedominantcurrencywith53bondstotallingEUR46.2bn(USD53.4bn),while20qualifyingUSDdenominatedbondshadacombinedissuesizeofUSD18.35bn.

Reporthighlights

•Greenbondsachievedhigherbookcover

andspreadcompressionthanvanillaequivalents,onaverage.

Seemoreonpage4

•Overall,66%ofgreenbondswere

allocatedtoinvestorsdescribingthemselvesashavinggreenorresponsibleinvestmentmandates.

Seemoreonpage7

•Yieldcurvescouldbebuiltfor34bondsinournon-sovereignsample.17pricedonorinsidetheirissuer’syieldcurves.

Seemoreonpage10

•After7and28days,greenbondshad,onaverage,tightenedbymorethancomparablevanillabasketsandcorrespondingindices.

Seemoreonpage12

•GreenbondETFs–Totalfundassetsin

greenbondETFsreachedUSD1.4bn,asLyxoraddedthefirstsovereigngreenbondETF.

Seemoreonpage16

•SovereignGreenBondClub:FourissuersaddedsixnewbondsworthacombinedtotalofUSD13.8bn.Twoofthesovereignissuerswithyieldcurvesachievedagreenium.

Seemoreonpage20

1.Marketdevelopments

RisinginflationpersistedduringH22021,ledbythepost-COVIDeconomicrecoveryandhigherenergyprices.TheFEDsignalleditcouldraiseratesthreetimesin2022andtherewereexpectationsthatitcouldacceleratethetaperingofitspandemicinducedassetpurchaseprogramme.Likewise,therewastalkthattheECBcouldreconsideritsnegativeinterestratepolicywhichhasbeeninplacesince2014.

Towardstheendoftheyear,theOmicronvariantofCOVID-19hit,whichchangedthetoneofthemarketwhilethenatureandextentofthediseasecouldbedetermined.Inmid-December,theECBdescribeditsplantostopnetbondbuyingunderitsPandemicEmergencyPurchaseProgramme(PEPP)attheendofMarch2022,withmaturingprincipalpaymentsrolledintonewpurchasesuntilatleasttheendof2024.Tosoftentheblow,theECBwillcombinethiswithanincreaseinQ12022purchasesunderitsAssetPurchaseProgramme(APP),butthosepurchaseswillbegraduallyreducedthereafter.

InEUR,corporatecreditspreadsendedH2unchanged.TherewasatemporaryblowouttowardstheendofNovemberinreactiontoOmicroncontainmentmeasures,butthathadsettleddownbytheendofDecember.Meanwhile,USDspreadsendedtheperiodwider:22%forAAA,19%forAA,17%forA,and12%forBBB

.2

Bytheendoftheyear,theFEDhadalreadystartedtoreduceitssupportforcreditmarkets.

USDCorporateCreditSpreads

160AAAAAABBB

140

120

100

80

60

40

20

0

August2021

October2021

November2021

December

2021

July2021

September

2021

Source:Refinitv

EURCorporateCreditSpreads

100AAAAAABBB

80

60

40

20

0

July2021

GreenBondPricinginthePrimaryMarket:July-December2021

August

2021

September

2021

October

2021

November2021

December

2021

Source:Refinitv

2

GreenBondPricinginthePrimaryMarket:July-December20213

USDBillions

80

60

40

20

0

20202021Includedinanalysis

Issuerswerekeentofundorrefundforaslongasratesremainedlow,whileinvestorscautiousaboutoverpayingforanythingthatcouldbehurtbyrisingrates.DuringH2,greenbondsamountingtoUSD240bnwereaddedtotheClimateBondsGreenBondDatabasewithrecordissuanceineachmonth,exceptAugust,andSeptemberbeingthebusiestmontheverforgreenbondvolumes(USD86bn).Closetotwo-thirds(63%)oftheH2issuancecomprisedEUR(USD87bn)andUSD(USD63bn)denominatedbonds.30%oftheH2volumesqualifiedforthisanalysis,amountingtoUSD73bn,44%ofwhichwaspricedinSeptember.Amongthe61issuers,11broughtmorethanonegreenbond.

GreenbondissuersinH22021

Thisreportincludes23debutgreendealsfrom19issuers.Amongthem,theKingdomofSpain(Spain)andtheRepublicofKorea(Korea),whocametothemarketwithEUR5bn(USD5.9bn)andEUR750m(USD812m),respectively.TheseissuersarediscussedingreaterdepthinourSovereignGreenBondClubsectionbeginningonpage20.

Relatablenameswhoareregularvisitorstotheglobaldebtmarketscanhelptoraisethevisibilityofgreenbondsandincreasediversificationopportunitiesforinvestors.OnesuchexampleisconsumerstapleMondelezInternational(Mondelez)whichpriceditsUSD2bndebutgreendealinSeptember.Mondelez,formerlyKraftFoods,ownsaglobalportfolioofhouseholdsnackingbrandsincludingCadbury,Milka,Oreo,Ritz,andToblerone.Theentityhasanestablishedpresenceinthedebtmarket,withUSD19bnofbondsoutstandinginfivecurrencies

attheendofJanuary2022.

3ThedebutgreendealwassplitbetweenaEUR650m(USD769m)8-year,aEUR650m(USD769m)11-year,andaEUR700m(USD829m)20-year.Theproceedswereearmarkedforsixeligibleprojectcategories:LandUse,EnergyEfficiency,RenewableEnergy,LowCarbonBuildings,WasteandPollutionandLowCarbonTransport;andtheframeworkclearlydescribedhowMondelezisusinggreenbondstofunditssustainabilityambitions.

NorinchukinBank(Norinchukin)enteredthegreenbondmarketinmid-September.TheUSD1bndualtranchedealwassplitequallybetween5-and10-yearmaturities.TheJapanesebankservesmorethan5,600agricultural,fishing,andforestrycooperativesfromitsheadquartersinTokyo.Norinchukin’sgreenbondframeworkreflectsitscorebusinessstrategy,andlistsRenewableEnergy,CleanTransportation,andCleanBuildingsaseligibleUseofProceeds(UoP)categories.

RecordvolumesofgreenbondspricedinSeptember

JulyAugustSeptemberOctoberNovemberDecember

Source:ClimateBondsInitiative

42repeatissuersbrought50greenbondsinH22021,thelargestofthiswasGermanstate-ownedinvestmentanddevelopmentbank,KfW.InSeptember,KfWprintedaEUR3bn(USD3.5bn)10-year,(tappedforanadditionalEUR1bn(USD1.2bn)inNovember)andinOctober,pricedaUSD3bn5-year.

KfWhasbuiltanextraordinaryrecordofconsistentissuancesinceitenteredthegreenbondmarketin2014.BytheendofJanuary2022,ClimateBondsGreenBondDatabasehadcaptured65bondsfromKfWin13currencieswithacombinedvolumeofUSD48.5bn,anditisthesecondlargestindividualissuertherein(afterFannieMae).In2021issuancevolumereachedEUR16.2bn,20%ofthefundingmix.BothdatapointsrepresentnewrecordsforKfWwhichchannelstheproceedsintolendingprogrammesforRenewableEnergyandEnergyEfficiency.

ABNAmroissueditsfourthgreenbondinSeptember,aEUR1bn(USD1.2bn)8-yearseniornon-preferreddeal.ThebondobtainedCertificationundertheClimateBondsStandard,accordingtotheLowCarbonBuildings,Solar,andWindCriteria.

Forthethirdconsecutiveyear,inSeptember,multinationaltelecommunicationsconglomerateVerizonCommunications(Verizon)pricedagreenbond,thistimeaUSD1bn20-year.VerizonpublishedanupdatedgreenfinancingframeworkinAugust2021whichdemonstratedstrongthoughtleadership.Theframeworkspecifiedfivecategoriesofeligibleexpenditures;describedhowtheentitywillmeetitsscience-basedtransitiontargets;andintroducedacriterionfortheselectionofunderwritersconsistentwithitssustainabilityobjectives.

Remarks:

•ItispersistentlychallengingtofindadequatedataforUSDgreenbondsandtheirvanillabasketswhichfurtherrestrictstheopportunitytodrawreliableconclusionsfromasmallsample.Forexample,orderbookdatawasnotavailableforsixofthe20greenbondsandsixofthevanillabondsinoursample.

•Seniorityrankingsoffinancialcorporatebondsaredenotedusingthefollowingabbreviations:SeniorPreferred(SP),SeniorNon-Preferred(SNP)andCovered(CO).Asperourstandardmethodology,thepaymentrankofthegreenbondismatchedwhenselectingvanillabondswithwhichtocomparetheperformance.

•Themethodologyfortheselectionofthebondsusedascomparatorsisgivenonpage25andacompletelistofthosebondsisonpage19.

GreenBondPricinginthePrimaryMarket:July-December20214

Green

Vanilla

bondaverage

-

-

EUR

19.3

EUR

17bp

bps

s

bondaverage

Green

bondaverage-19.3bps

Vanilla

bondaverage

-17bps

EUR

EUR

2.Spreadcompressionandbooksize:greenbondsinbothEURandUSDattractedlargerbookcoverandexhibitedlargerspreadcompressiononaverage,thanvanillaequivalents

•EUR:Averageoversubscriptionwas3.4timesforgreenbonds,and2.7timesforvanillaequivalents.Spreadcompressionaveraged19.3bpsforgreenbondsand17bpsforvanillabonds.

•USD:Averageoversubscriptionwas3timesforgreenbondsand2.7timesforvanillaequivalents.Spreadcompressionaveraged25.9bpsforgreenbondsand21.7bpsforvanillabonds.

Greenbondsareoversubscribed,andexperiencespreadtighteningduringthepricingprocess,justlikevanillabonds.Tohelpdeterminewhetherinvestorsattachanyvaluetothegreenlabel,greenbondsarecomparedtocarefullyselectedvanillaequivalents.

EUR:Greenbondsacheivedgreaterspreadcompressiononaverage,comparedtovanillaequivalents

SSACoveredSpreadcompression

NRW2031

KfW2031

AdifAlta2031

EIBKOR2024

AucklandCouncil2031(SS)Soc.DuGrandParis2031

SocduGrandParis2051IledeFrance2036

OntarioTeachers’2051BAWAG2029(CO)

NDB2026(CO)UniCredit2026(CO)ING-DiBa2028(CO)SparebankenVB2026(CO)Soc.Gen.SFH2026(CO)LBBW2028SNP

SwissLife2031

SegroCapital2031

Vesteda2031

TenneT2035

SpareBank1SR2026(SP)AXALogistics2026Stedin2026

NTT2028

AAA

AA

ABBB

Spreadcompression

•GreenBond•Vanillabond

0-5-10-15-20-25-30-35-40

0-5-10-15-20-25-30-35-40

NTT2025

Leasys2024

Nat.Grid2028

LeasePlan2026

NIBC2026(SP)

Mondelez2041

Mondelez2029

Mondelez2032

ERG2031

NNBankNV2028(SNP)

SmurfitKappa2029

SmurfitKappa2033

ABNAmro2029(SNP)

CTP2026

CTP2031

Acciona2027

CBRE2029

Blackstone2030

AXACEF2030

Engie2029

Engie2036

VIAOutlets2028

RWE2028

RWE2033

USD:Greenbondsacheivedgreaterspreadcompressiononaverage,comparedtovanillaequivalents

Spreadcompression

TVA2031

EIBKOR2028

KFW2026

MidAmerican2052

Pacificorp2052

AVB2032

NorinchukinBank2031NorinchukinBank2026ICBC2024

0-5-10-15-20-25-30-35-40

USD

25.9

USD

21.7

bps

bps

Vanilla

bondaverage

Green

bondaverage

Spreadcompression

ICBC2026

ICBCIL2026

Amipeace2026Swedbank2026(SP)Dominion2031Verizon2041

BostonProperties2033Healthpeak2028

0-5-10-15-20-25-30-35-40

USD

25.9

USD

21.7

bps

bps

Green

bondaverage

Vanilla

bondaverage

GreenBondPricinginthePrimaryMarket:July-December20215

EURgreenbondpricing

EURgreenbondsachievedlargerorderbooksinH22021(3.4x)comparedtothepriorhalfyear(2.9x).Conversely,spreadtighteningwaslessaggressivewithanaverageof19.3bpsagainst20.4bpsseeninH1.Greenbonds,onaverage,outperformedvanillaequivalentsonbothmetrics.

Individually,61%ofgreenbondsexperiencedgreateroversubscriptioncomparedtovanillaequivalents,anincreasecomparedtothe40%seeninH12021.LBBW2028(SNP)hadbookcoverof2.2times,whichwasthesameasitsvanillapair.Oftheremainingbondsinthesample,28hadlargercoverthanvanillaequivalents,while18didnot.

Slightlyoverhalf(53%)ofgreenbondsachievedlargerspreadcompressionthattheirvanillaequivalents.Fivebondsachievedthesameamountoftighteningastheirrespectivevanillacounterparts:KfW2031,NDB2026(CO),UniCredit2026(CO),Mondelez2029,andNNBankNV2028(SNP).23greenbondstightenedmorethantheirbaskets,while20didnot.

Bookcover

Threegreenbondsstoodoutbyattractingordersamountingtooverseventimeslargerthantheirdeals.

SpanishrenewablescompanyAccionaEnergybuiltthelargestbookcoverof7.5times.Thepure-greencredentialsoftheissuerhelpedtoattractinvestorstotheEUR500m(USD578m)six-yeardeal.

TheSeptemberKfW2031accumulatedEUR22bnoforders,coveringitsEUR3bn(USD3.5bn)finalsizeby7.3times.ThiswasthelargestEURdenominatedgreenbondfromaSSAissuertodate,and,evidently,investorswelcomedtheinitiative.

AucklandCouncil’sfirstEURgreenbondattractedanorderbookthatcovereditsEUR500m(USD565m)nogrowtransactionbyseventimes.Theissuerdescribedthecompositionoftheorderbookasadiverserangeofhigh-qualityrealmoneyaccounts,predominantlyfromEurope,whichhelpedtodiversifytheinvestorbase.

Paper-basedpackagingcompanySmurfitKappapriceditsdebutgreenbondinSeptember.Thetwo-tranchedealcomprisedaEUR500m(USD586m)8-year,andaEUR500m(USD586m)12-year.Thebondsachievedorderbooksof6.6and5.8times,respectively,afterextremelystronginvestorengagementduringtheroadshow.Theproceedswereearmarkedtofinanceorrefinancecirculareconomyadaptedproducts,andLandUseconsistentwiththeentity’ssustainabilitystrategy.

Spreadcompression

UKREITSegroPlc(Segro)priceditsfirstgreenandfirstEURbondinSeptember.TheEUR500m(USD586m)10-yearexperiencedspread

compressionof37.5bps,themostaggressiveoftheEURgreenbondsinH2.SmurfitKappaalsoperformedwellonthismetricwitheachofitsgreenbondstighteningby35bps.

ERGSpa(ERG),anItalianenergycompanywithafocusonrenewables,priceditsthirdgreenbondinSeptember.ThespreadontheEUR500m(USD591m)10-yearbondnarrowedby32bpsduringbookbuilding,complementinganorderbookthatwas6.4timesoversubscribed.TheproceedsofthebondwillbeusedtofinanceorrefinanceRenewableEnergyprojectsinEurope.

Amongthetopthreeperformersonspreadcompression,nonehadayieldcurve,hencethepresenceofagreeniumcouldnotbedetermined.However,allthebondswentontotighteninthesecondarymarket.Allthreeissuersremarkedthattheywereveryhappywiththereceptionoftheirgreenbonds.

NB1:TherewasnobookcoverdataforthevanillabasketofTenneT2035,henceitwasnotincludedintheaveragenumbers.

USDgreenbondpricing

TheH22021USDgreenbondsampleachievedthreetimesbookcoveronaverage,whichwasmoresubduedthantherecord4.8timesachievedinH1.Likewise,averagespreadcompressionof25.9bpswaslowerthanthe29.9bpswitnessedinthepriorhalfyear.

Sevenoutof11(64%)greenbondsachievedlargerbookcoverthanvanillacounterparts,fourdidnot.Most(13outof17or81%)greenbondsexperiencedlargerspreadcompressioncomparedtoequivalents.

Bookcover

SixbondsintheUSDsamplewereexcludedfromthebook-coveranalysisbecausetheydidnothaveanydataavailable(seeNB2).TennesseeValleyAuthority(TVA)didnothaveanycomparablebondsandtherewasnobook-coverinformationavailableforthecomparablebondofKfW2026.

Verizon’sthirdgreenbondwaswellreceivedbythemarket.TheUSD1bn20-yearcovereditsbookbyfivetimes,thelargestamongtheUSDgreenbondsinH2.

TVAhasstateditsambitiontoreachnetzeroby2050.ItssustainablefinancingframeworkwaspublishedinSeptember,shortlyfollowedbyaUSD500m10-yeardebutgreenbondwhichattractedbookcoverof4.4times.ThebondwentontopricewithagreeniumandhelpedTVAtoachieveitslowestever10-yearfundingrate.ProceedsfromthesalewillfundTVA’stransitiontoincreasedrenewableenergygeneration,energystorage,transmissionsystemupgrades,andthedevelopmentofadvancedcleanenergytechnologies.

ChileanchemicalcompanySociedadQuimicayMineradeChileSA(SQM)priceditsfirstgreenbondinSeptember.The2051maturitybuiltanorderbookofUSD3bnwhichcoveredthe

USD700mdealby4.3times.Eligibleexpendituresoftheproceedsincludetheextractionoflithiumanditssubsequentprocessing.Therewasverylimitedmarketdataavailableforthisbond,butithasbeenincludedinthisanalysistohighlightthefactthatgreenbondscanbeusedtofundabroadrangeofactivitiesnecessaryforthetransitiontoalow-carboneconomy.

Spreadcompression

SpreadcompressiondatawasavailableforallbondsintheUSDsampleexcepttwo(seeNB2)andTVAdidnothaveanycomparablebonds.

TheUSDbondsexperiencingthelargestspreadcompressionswereallChinesefinancialinstitutions.Noneofthemhadanyinformationavailableregardingbooksize.

IndustrialandCommercialBankofChina

(ICBC)pricedapairofgreenbondsinOctober.TheUSD1.05bn2024bondandtheUSD1bn2026bondeachtightenedby40bpsduringbookbuilding.The2024pricedwithanormalnewissuepremiumwhilethe2026achievedagreenium.ICBCisaprolificissuerofgreenbonds,andtheClimateBondsGreenBondDatabaserecords22bondsamountingtoUSD14bninsixcurrenciesincludingtheMacauPataca.

BankofChinahasissuedmultiplegreenbondsinvariouscurrencies,but,inNovember,priceditsfirstoneissuedthroughitsspecialpurposevehicle,Amipeace.TheUSD600m5-yearbondenjoyedspreadcompressionof40bpsandpricedwithanormalnewissuepremium.

ICBICLFinanceCoLtd(ICBC)achievedspreadcompressionof35bpsonitsUSD700m2026bond.Thebondpricedwithanormalnewissuepremium.TheproceedsofthebondwillbesplitbetweenLowCarbonTransport,LowCarbonBuildings,andWaterprojects.

NB2:Therewasnoorderbookdataavailablefor

ICBC2024,ICBC2026,ICBCIL2026,Amipeace2026,

Interchile2056,orEIBKOR2028.

NB3:TherewasnospreadcompressiondataavailableforInterchile2056orSQM2051

Methodologynotes:Basketscomprisebondsthatmostcloselymatchthegreenbondsandareissuedduringthesamequarter.Thebasketsinthispublicationincludebetweenoneandbonds.Foranexplanationofthemethodology,seepage25,andforsummarystatisticsofthebaskets,seepage19.

GreenBondPricinginthePrimaryMarket:July-December20216

EUR:Greenbondsacheivedlargerbookcoveronaverage,comparedtovanillaequivalents

SovereignSSATimesoversubscribed

NRW2031

KfW2031

AdifAlta2031

EIBKOR2024

AucklandCouncil2031(SS)Soc.DuGrandParis2031

SocduGrandParis2051IledeFrance2036

OntarioTeachers’2051BAWAG2029(CO)

NDB2026(CO)UniCredit2026(CO)ING-DiBa2028(CO)SparebankenVB2026(CO)Soc.Gen.SFH2026(CO)LBBW2028SNP

SwissLife2031

SegroCapital2031

Vesteda2031

TenneT2035

SpareBank1SR2026(SP)AXALogistics2026Stedin2026

NTT2028

Covered

02

AAA

4

6

AA

8

EURGreen

bondaverage

3.3x

EURVanilla

bondaveragebookcover:

2.7x

ABBB•GreenBond•Vanillabond

Timesoversubscribed

NTT2025

Leasys2024

Nat.Grid2028

LeasePlan2026

NIBC2026(SP)

Mondelez2041

Mondelez2029

Mondelez2032

ERG2031

NNBankNV2028(SNP)SmurfitKappa2029SmurfitKappa2033ABNAmro2029(SNP)

CTP2026

CTP2031

Acciona2027

CBRE2029

Blackstone2030

AXACEF2030

Engie2029

Engie2036

VIAOutlets2028

RWE2028

RWE2033

02468

3

EUR

.3x

EUR

2.7x

Vanilla

bondaverage

Green

bondaverage

USD:Greenbondsacheivedlargerbookcoverthanvanillaequivalentsonaverage

Timesoversubscribed

TVA2031

KFW2026

MidAmerican2052

Pacificorp2052

AVB2032

NorinchukinBank2031

024

6

8

02468

Timesoversubscribed

Swedbank2026(SP)

Dominion2031

Verizon2041

SQM2051

BostonProperties2033

Healthpeak2028

NorinchukinBank2026

USDVanilla

USDGreen

USDVanillaUSDGreen

bondaverage

bondaveragebookcover:

bondaveragebookcover:3x

bondaverage

2.7x

3x

2.7x

GreenBondPricinginthePrimaryMarket:July-December20217

3.Greenallocations:66%wasallocatedtoinvestorsdescribingthemselvesasgreen

Theamountallocatedtoinvestorsdescribingthemselvesasgreenorsociallyresponsiblewas66%

The57non-sovereignissuersincludedinthisanalysiswereinvitedtodisclosewhatpercentageoftheirdealwasallocatedtoinvestorsdescribingthemselvesasgreenorsociallyresponsible(greeninvestors).Theresultsofthisoutreachwereasfollows:

•30issuersrepresenting33bondssharedthedata.*

•Sevenissuersrepresentingninebondsrepliedwithoutdisclosingthedata.*

•Seventeenissuersrepresenting25bondsdidnotreply.

•Asusual,theresponseratefromUSDissuerswasverylow,withjustfiveacknowledgingtherequest.

*KfWdisclosedforitsEURbutnotUSD.Basedontheseresponses,theaverageallocationtoinvestorsdescribingthemselvesasgreenwas66%,identicaltotheprior

observationperiod.Allocationsrangedfrom30%(Verizon2041)to95%(TenneT2035).

Asalways,someissuersdidnotcontributebecausetheydoubtedtheaccuracyofgreeninvestorcalculations.Suchcalculationsappeartobedeterminedbyacombinationoffactorsincludingdedicatedstrategies,integrationofESGintoinvestmentprocess,thenumberofdedicatedresearchanalysts,commitmenttothePRIprinciples,andpriorbondpurchasingbehaviour.

TheclassificationoffundsunderEUSustainableFinanceDisclosureRequirements(SFDR)Article8andArticle9couldhelptomaketheallocationprocessmoretransparentofferingtheabilitytoverifythelegitimacyofsustainabilityclaims.However,PrincipalAdverseImpact(PAI)statementsforcompliantfundmanagersarenotdueuntilmid-2023.Beyondthis,applyingtheresultstogreenbondallocationswilltaketimeandeffortforbrokerstoimplement,andnobodyisevenattemptingtoapplyanysuchmethodologyatthemoment..Also,aswiththecurrentsituation,therewouldbenothingpreventinginvestorswhowereallocatedbasedonanArticle8orArticle9classificationfromaddingthegreenbondstootherportfolios.

Investors’enthusiasmtoclassifytheirfundsasArticle8orArticle9hasnaturallyresultedinagreaterdemandforsustainablefinanceinstruments,includinggreenbonds.Thisisexpectedtopersist.

Thegreenlabeldefinitelyhelpsissuerstoattractabroaderandmorediverseinvestorbase.Issuers,includingBostonProperties,notedthatthegreenlabelhadhelpedtoincreasedemandfortheirbonds,whichmayhavecontributedtotighterpricing.USbasedREITHealthpeakPropertiesissueditssecondgreenbondinNovemberandobservedthatitstransparentandrobustgreenbondframeworkhelpedtoattractESG-focusedinvestorstothedeal.

Methodologynotes:Greeninvestorparticipationisprovidedbyissuers.Wheretheallocationissplitbetweendark,medium,andlightgreeninvestorspercentagesfordarkandmediumgreenareincludedinthisanalysis.Thereisnostandardmethodologyfordefininga‘green’investorandweacknowledgethat