Market activity stalled by March volatility

Our specialists take a moment to reflect on the key trends and themes shaping the market, consider the impact of issuer blackouts on the Financial Institution (FI) GSS primary market – and more.

Primary Market Activity

March saw most issuers opt for EUR currency (4 transactions), whilst Intesa Sanpaolo accessed the GBP market for currency and investor diversification and Sumitomo Mitsui Trust Bank opted for a USD-denominated 5Y 500m Green bond; in line with their previous green bonds.

Senior format dominated supply with five transactions, whilst Stadshypotek re-opened the FI GSS market with a low beta 5yr covered green bond. GSS capital issuance remained nil, with no issuance anticipated for the near future.

The green format continues to be the label of choice for FI’s, with five GSS transactions in green format, followed by one in social format from NatWest Group.

European Banks & Insurance GSS/S Issuance [1]

GSS/S issuance registered a modest 4% year-on-year (YoY) growth in March which was largely impacted by increased volatility amidst high-profile bank rescues. However, 2023 year-to-date (YTD) total volume still stands strong; up 53% YoY, representing 36% of 2022 total volumes, given exceptionally strong volumes in January.

Green GSS/S issuance (c. €24bn) represents 83% of GSS/S issuance in 2023 YTD. This represents a continuation of its longstanding dominance and aligns with activity from recent years (c.75% for 2020 & 2021 and 85% for 2022). Social issuance accounts for 14%, which is marginally up on 2022 (12%) with Sustainability at 4%.

GSS/S issuance has been well split between Senior Preferred (39%) and Senior Non-Preferred (35%) followed by Covered (24%), along with small tail of GSS capital issuance (2%)

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

Source: Dealogic (31/03/23)

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

Source: Dealogic (31/03/23)

Global EUR/GBP FIG GSS Issuance [2]

  • EUR Senior: YTD GSS issuance is €19.6bn (+53% vs 2022 YTD), with total senior supply at €101.6bn (+53%); resulting in GSS as a % of total issuance of 19%, which is the same as 2022 YTD.
  • GBP Senior: YTD GSS issuance is £1.1bn (+340% vs 2022 YTD), with total senior supply at £14.3bn (+68%); resulting in an increase of GSS as a % of total issuance of 8% (2022 YTD was 3%).
  • EUR Covered: YTD GSS issuance is €7.6bn (+96% vs 2022 YTD), with total covered supply at €89.3bn (+18%); resulting in an increase of GSS as a % of total issuance of 8% (2022 YTD was 5%).
  • GBP Covered: YTD issuance is nil (2022 YTD: £0.5bn), with total covered supply at £5.8bn (-20%); resulting in GSS as a % of total issuance of nil (2022 YTD was 7%).

Banking & Financial Institutions Sector Developments

  • Commerzbank becomes first German bank with SBTi-validated emissions reduction targets. The Science Based Targets initiative (SBTi) has validated the Bank’s near-term emissions reduction targets for 2030. In September 2020, Commerzbank became the first German bank to commit to setting science-based targets through the SBTi.
  • Deutsche Bank has increased its target for ESG financing and investments to €500bn between early 2020 and the end of 2025, after exceeding its initial target of €200bn by 2022 by €15bn. To meet its new target, the bank will: (1) convert traditional supply chain financing of international companies to a supply chain financing linked to environmental and social criteria; (2) provide at least €3bn in ESG financing for developing economies and emerging markets by the end of 2025; (3) supply between €7bn and €10bn in financing for energy efficient homes by the end of 2025.
  • TD Bank Group has launched a new Sustainable & Decarbonisation Finance Target to support its customers, clients and the communities it serves, by aiming to mobilise $500bn CAD by 2030. The CAD will be mobilised via financial activities that include lending, financing, underwriting, advisory services, insurance, and the Bank's own investments. In 2017, TD was the first major Canadian bank to set a financial target of $100bn CAD to be deployed by 2030 toward low-carbon lending, financing, asset management and internal corporate programs. In 2022, the Bank achieved this target.
  • CIBC announced a new sustainable finance offering in collaboration with Export Development Canada, to help support export-oriented Canadian businesses transitioning towards more sustainable business operations. The Sustainable Finance Guarantee pilot program is a risk-sharing solution aimed at helping with lending activities that contribute to decarbonising the economy and will provide up to $1bn in financing over the next three years.
  • UniCredit and Eni have announced their partnership around Open-es, an ecosystem initiative that seeks to enhance cross-business collaboration and support companies in measuring and improving their ESG performance. UniCredit will act as a value-chain lead partner in this alliance, thereby playing a strategic role in the sustainable development of the Italian corporate sector.
  • Munich Re has discontinued its membership of the Net Zero Insurance Alliance (NZIA). Munich Re views the opportunity to pursue decarbonisation goals as a collective approach among insurers worldwide, without exposing themselves to material antitrust risks, as extremely limited. As such, they believe that it’s more effective to pursue their climate ambition to reduce global warming individually.

Investor Developments

  • TD Asset Management has expanded its sustainability suite with the launch of the TD North American Sustainability Bond Fund, its first actively managed environmental, social and governance related fixed income product. The launch follows the rollout of the TD North American Sustainability Equity Fund and TD North American Sustainability Balanced Fund, in September 2020.
  • Schroders has announced the launch of Schroders Capital Climate+ LTAF, a long-term asset fund designed to help UK pension fund investors support the net zero transition. The strategy will aim to invest across four long-term themes: climate mitigation, climate adaption, biodiversity / natural capital and social vulnerabilities.
  • Blackrock have published their engagement priorities for 2023. The release outlines the key themes identified by the firm as sources of material risk or opportunity that will form the focus of its engagements with companies this year and in continuing its efforts towards sustainability-focused topics.
  • Robeco has launched a Sustainable Senior Loan Fund (SLF), its second closed ended private debt fund and one of the first to credibly integrate sustainability into private debt investments.

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 (31/03/23). It includes Global Financial Institutions EUR & GBP Issuance.

This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes. It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in The Netherlands, authorised and supervised by De Nederlandsche Bank, the European Central Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, The Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, The Netherlands. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright © NatWest Markets Plc. All rights reserved.

scroll to top