Markets Monthly #9 - 09/10/2020: Highest monthly volume since market inception

Financing Credible Transitions

The full session from Climate Bonds Conference, featuring Marisa Drew from Credit Suisse in conversation with Bloomberg’s Francine Lacqua is now available on YouTube. The session launched the Financing Credible Transitions white paper, a joint Credit Suisse and Climate Bonds project.

At 51:43secs it’s a wide ranging discussion worth listening to.

The full paper and summary note can be downloaded here. Watch our social media for scheduling of a special Transition Webinar with Credit Suisse in Mid-November.

Green Bond Pricing in the Primary Market: H1 (Q1-Q2) 2020

This is the 10th iteration of “Green Bond Pricing in the Primary Market” covering January to June 2020.

The report monitors the performance of 38 EUR and eight USD denominated benchmark size green bonds with a total value of USD37bn issued during H1 2020.

The full series of Pricing reports is available here.

September at a glance

Overall, September 2020 issuance added up to USD32.2bn, bringing cumulative issuance volume since inception to USD948bn, edging closer to the USD1trillion milestone in the Climate Bonds Database. The figure translates into 12% year-on-year growth against September 2019 as well as a 132% increase compared to August 2020. It also marks an all-time monthly issuance record! The several new issuer names demonstrate that the green bond market is no longer a niche, but well on its way towards becoming a mainstream format for many debt-issuing organisations.

Evidence to support this include Non-financial Corporates’ volume for the month: the segment reached USD11bn which is another record for a single month. Aptly, the “drivers” behind the remarkable figure were the German carmakers Daimler AG (EUR1bn/USD1.1bn) and Volkswagen (EUR2bn/USD2.2bn). American telecommunications company Verizon also boosted the numbers with its second green bond (USD1bn). Elsewhere, corporates keep innovating to kickstart their low-carbon business transitions: Airbus (Netherlands) recently unveiled plans for commercial zero-emission aircraft.

Financial economy players are not far behind: Morgan Stanley just committed to reach Net-Zero financed emissions by 2050, and peer JP Morgan pledged to align its financing to the Paris Agreement, including setting decarbonisation targets on a sector-by-sector basis. In September 2020, Financial Corporates’ volume added up to USD9.6bn with the main part coming from German issuers such as Munich Re (EUR1.3bn/USD1.4bn) and Commerzbank (EUR500m/USD556m). SpareBank 1 Boligkreditt (Norway – EUR1bn/USD1.1bn) and Netherland’s Rabobank (USD1bn) also contributed significantly to the figure.

On the Sovereign side, the Republic of Ghana (EUR35m/USD42m) took out their first green loan – the first ever green debt instrument from the country (see New issuer spotlight) – whilst China pledged carbon neutrality before 2060 and peak carbon emissions by 2030, a landmark commitment from the world’s largest emitter and second-largest economy.

Total issuance for the month from Emerging Markets amounted to USD5.1bn, of which China made up more than a third with USD1.7bn. This came from two deals: Bank of China (CNY3.5bn/USD932m) and China Merchants Bank Co., Ltd (USD800m). Saudi Electricity (Saudi Arabia) added to that figure with USD1.3bn tapping the green bond market for the first time with two instruments (see New issuer spotlight). Qatar also joined the country list with an issuance from QNB Bank (USD600m).

A whopping USD24.7bn came from Developed Markets with record monthly volume from Germany: USD8.1bn. The deals that contributed the most to this figure came from Volkswagen (EUR2bn/USD2.2bn), Landwirtschaftliche Rentenbank (SEK1bn/USD106m), Munich Re (EUR1.3bn/USD1.4bn), and Daimler AG (USD1.1bn). The market saw deals from a total of nine German issuers. The USA came in second in the country ranking with volume from 16 issuers, with Verizon (USD1bn), New York MTA (USD900m) and Digital Realty Trust (USD834m) making up the lion’s share. This was followed by Italian issuers Unipol Gruppo (EUR750m/USD834m), ERG SpA (EUR500m/USD590m) and Falck Renewables (EUR200m/USD222m).

Moreover, there were another six countries with monthly issuance above USD1bn: the Netherlands (USD1.6bn), Norway (USD1.4bn), Sweden (USD1.2bn), Ireland (USD1.1bn), Denmark (USD1bn) and Japan (USD1bn).

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