GSS/S issuance for FIs hits record high

In the month where we saw Green, Social, Sustainability and Sustainability-linked (GSS/S) issuance hit a new monthly high for Financial Institutions [1], our specialists take a moment to reflect on the key trends and themes shaping the market from January.

Primary Market Activity

The EUR market hosted almost all the action (26 transactions; €17.5bn eq.), with the USD market only seeing one green transaction; a $1.25bn 4NC3 HoldCo from PNC Bank, its second green bond since its inaugural issue in 2019.

Senior format dominated supply (17 transactions), with covered bond issuance having eight successful transactions across green (5) and social (3). Capital issuance also experienced a revival with ANZ and CNP Assurances raising $1bn and €500m in the Tier 2 market.

The green format continues to be a preferred label for financials, accounting for 20 of the 27 GSS transactions (€13.7bn equiv.), followed by five transactions in social format (€3.5bn) and two sustainability bonds (€1.5bn).

European Banks & Insurance GSS/S Issuance

GSS/S issuance more than doubled in January, on a year-on-year (YoY) basis (+123%), recording the busiest ever January in the European Banks & Insurance GSS/S market.

Green GSS/S issuance (c. €13bn) currently represents 74% of GSS/S issuance in 2023 YTD; continuing its longstanding dominance (c.75% for 2020 & 2021 and 85% in 2022). Whilst Social and Sustainability issuance is at 20% and 6% respectively.

GSS/S issuance largest chunk is commanded by Senior Preferred (44%) followed by Senior Non-Preferred (27%) and Covered (26%) along with a small contribution of capital issuance at 3%.

European Bank and Insurance GSS/S Supply 2022-2023 YTD

Source: Dealogic (31/01/23)

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

Source: Dealogic (31/01/23)

Global EUR/GBP FIG GSS Issuance [2]

  • EUR Senior: A year-to-date (YTD) GSS issuance of €13.5bn (+111% vs 2022 YTD), with total senior supply at €63.6bn (+111%); resulting in GSS being 21% of total issuance, the same as 2022 YTD.
  • GBP Senior: The YTD GSS issuance is nil – the same as 2022 YTD – with total senior supply at £8.0bn (+108%); resulting in GSS as a % of total issuance of nil (2022 YTD: nil).
  • EUR Covered: A YTD GSS issuance of €4.6bn (2022 YTD: nil), with total covered supply at €41bn (+45%); resulting in an increase of GSS as a % of total issuance to 11% (2022 YTD: nil).
  • GBP Covered: The YTD issuance is nil – the same as 2022 YTD – with total covered supply at £3.0bn (-9%); resulting in GSS as a % of total issuance of nil (2022 YTD: nil).


Banking & Financial Institutions Sector Developments

  • NatWest Group has published its Science Based Targets initiative (SBTi) validated science-based targets. NatWest Group has now become the first UK bank, and one of the largest banks globally to date, to have science-based targets validated by the SBTi.
  • BNP Paribas is embarking on a new phase designed to rapidly accelerate the transition to a low carbon economy. This includes achieving a target of €40 billion in outstanding financing for the production of low-carbon, primarily renewable, energies by 2030 and to reduce outstanding financing for oil extraction and production to less than €1 billion by 2030.
  • Barclays has significantly increased its sustainable finance commitments with a new target to facilitate $1trn of sustainable and transition financing between 2023 and the end of 2030 and an increase to its Sustainable Impact Capital investment mandate from £175m by 2025, to £500m by 2027.
  • ABN AMRO joined the Net Zero Banking Alliance (NZBA) and published its climate strategy which provides insight into how they will bring their portfolios in line with limiting global warming to a 1.5°C scenario and supporting the transition to a net zero economy by 2050.
  • Crédit Agricole has published its 2030 targets on five sectors (Oil & Gas, Automotive, Power, Commercial Real Estate & Cement). Going forward, Crédit Agricole Group will disclose the targets for five additional sectors (Shipping, Aviation, Steel, Residential Real Estate and Agriculture). 
  • Nordea has set four new sector targets covering Shipping, Residential Real Estate, Oil and Gas and Mining. These targets will help Nordea steer towards its objective to reduce carbon emissions by 40-50% across its lending and investment portfolios by 2030.
  • BFCM announced it is establishing an annual societal dividend in light of the scale of the climate crisis and growing inequalities. Each year, 15% of its consolidated net income will be used to finance environmental transformation and solidarity projects.
  • BNP Paribas issued its inaugural €50 million Social Index-linked Bond, which tracks the MSCI Eurozone Social Select 30 Index. This structuring will enable investors to engage on social impact and supports social causes through a donation mechanism embedded into the transaction 

Investor Developments

  • Vanguard have decided to withdraw from the Net Zero Asset Managers (NZAM) initiative to provide clarity to their investors’ desire about the role of index funds and how they think about material risks, including climate-related risks. This change in NZAM membership status will not affect their commitment to helping their investors navigate the risks that climate change can pose to their long-term returns.
  • The Net Zero Asset Owner Alliance (NZAOA), representing $11tn in assets under management (AuM), will no longer be able to utilise carbon removals as a method to reach their alliance-aligned goals, according to new rules released by the organisation. The alliance’s more stringent requirements will also require members to set climate goals for additional asset classes such as private equity investment.
  • Northern Trust Asset Management has launched two global bond ESG funds and the corresponding indices, built in partnership with German index provider Solactive. The NT Global Bond ESG Climate Index Fund and the NT Global 1-5 Years Bond ESG Climate Index Funds target issuers that portfolio managers believe are better positioned to manage financially material ESG risks and a transition to a low carbon economy.

Government and Regulatory 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] Source: Bloomberg, BondRadar, 31/01/23.

[2] Includes Global Financial Institutions EUR & GBP Issuance. Source: NatWest Markets Syndicate, 31/01/23.

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.

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