Trend #1: Volumes
Basically cactus and down vs last year!
However, this is not unsurprising versus overall market. General consensus is that Sustainable Finance markets whilst down, it’s not down as much as the overall market.
Usually Q3 Sept (then start of 4th Q/R) are seasonally high, however, since covid seasonality is very difficult to predict.
Trend #2: Greenium
We have heard that many “greeniums” have reduced and not apparent in many markets.
Not unsurprising given the recent bond market challenges are more of a pricing issue than fundamental credit issue.
We understand deals are still over subscribed and helping to reduce execution risks; however, this is not translating into much pricing leverage currently.
Trend #3: Instrument Composition
Two interesting graphics below show us:
Use of Proceeds reducing in their contribution to the composition and Linked Instruments taking this volume (see table below)
We expect this to intensify overall in coming years, however in the short term we can see that green as the anchor to the market is increasing, linked decreasing and then social only also decreasing.
We think this is a reaction to challenges in SLBs and a more cautious market – use of proceeds more conservative and tested. (see bar chart below)
Trend #4: Issuer Type
We see a real balance in the market. Previous years (especially over COVID) saw spikes in multilaterals and we have seen periods where banks have also dominated.
This is a good sign that there is a good spread across the market, although we don’t expect to see this longer term with Corporates to win out.
