Flurry of GSS activity in the banking sector in August

Our specialists reflect on the recent uptick in green, social, sustainability / sustainability-linked (GSS/S) primary market activity in the banking sector.

Primary Market Activity

The GSS primary market has seen a flurry of activity over the past couple of weeks, after declining to a monthly low in July and seeing no activity in the first half of August; the lion’s share of the 11 transactions (€7.3bn eq.) issued across the last two months, occurred in this period. Given the number of GSS deals on screens, there was limited differential in the oversubscription vs conventional; 2.4x for GSS transactions vs 2.5x for conventional deals.

Senior issuance accounted for the majority of GSS supply (8 transactions / €5.3bn) with covered bonds (3 transactions / €2.0bn) accounting for the remainder. Although currency diversification (GBP, CHF, etc) was prominent pre-summer, all GSS transactions in the last two months have been in EUR.

Green (€5.3bn across 8 transactions) continues to be the label of choice for most financial institutions, but social issuance also remains active, as well as sustainability-linked. 

European Banks & Insurance GSS/S Issuance [1]

GSS/S activity declined to its yearly low in July before bouncing back in the second half of August. 2023 YTD total volume is up 24% YoY, representing 80% of 2022 total volumes, driven by exceptionally strong volumes in January, May, and June.

Green issuance (c. €52bn) represents 80% of GSS/S issuance in 2023 YTD – continuing its longstanding dominance and in line with the past few years (c.75% for 2020 & 2021 and 85% for 2022). Social issuance accounts for 16% while Sustainability and SLLB contribute a modest 2% each.

Issuance has been dominated by Senior format, with an equal split between Senior Non-Preferred (36%) and Senior Preferred (35%), followed by Covered (25%), along with a small portion of GSS capital issuance (4%).

European Bank and Insurance GSS/S Supply 2023 YTD

Source: Dealogic (01/09/23)

European Bank and Insurance GSS/S Issuance Breakdown 2018-2023 YTD

Source: Dealogic (01/09/23)

Global EUR/GBP FIG GSS Issuance [2]

  • EUR Senior: YTD GSS issuance of €42.4bn (+28% vs 2022 YTD), with total senior supply at €197.2bn (+27%); resulting in GSS as a % of total issuance of 21%, which is the same as for 2022 YTD.
  • GBP Senior: YTD GSS issuance is £3.5bn (+312% vs 2022 YTD), with total senior supply at £25.8bn (+26%); resulting in an increase of GSS as a % total issuance of 14% (2022 YTD: 4%).
  • EUR Covered: YTD GSS issuance of €16.2bn (+19% vs 2022 YTD), with total covered supply at €163.2bn (+13%); resulting in a small increase of GSS as a % of total issuance of 10% (2022 YTD: 9%).
  • GBP Covered: YTD issuance is nil (2022 YTD: £0.5bn), with total covered supply at £13.4bn (+8%); resulting in GSS as a % of total issuance of nil (2022 YTD: 4%).

Banking & Financial Institutions Sector Developments

Investor Developments

  • Goldman Sachs Asset Management (GSAM) has launched two new sustainable bond funds: the Goldman Sachs Global Impact Corporate Bond Fund and the Goldman Sachs USD Green Bond Fund.
  • BlackRock and the Government of New Zealand are working together to launch a first-of-its-kind climate infrastructure fund in New Zealand to unlock investment to support 100% renewable electricity generation. The goal of the fund is to support New Zealand to become one of the first countries in the world to reach 100% renewable electricity.
  • Norges Bank Investment Management (NBIM) has joined the Partnership for Carbon Accounting Financials. NBIM launched its 2025 climate action plan last year, which included a commitment to push companies in its portfolio to align their activities with the net zero emission targets in the Paris agreement. NBIM will also expand its climate risk reporting at the portfolio level.
  • Martin Currie, a Franklin Templeton Company, has launched a new social impact fund focusing on well-being, inclusion and the just transition.

Government and Regulatory Developments

ESG and Credit Rating Agencies Developments

Find out more

As always, if you would like to discuss any of the above further, please reach out to our authors:

*For any unfamiliar terms used within this article please refer to our Insights glossary.

Additional information

  1. Includes European Bank & Insurance GSS/S Issuance
  2. Source: NatWest Markets Syndicate (01/09/23), includes Global Financial Institutions EUR & GBP Issuance.

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