Rare ‘transition’ bond amidst an increase in non-European GSS supply

Our specialists reflect on an increase in non-European Financial Institution (FI) green, social, sustainability / sustainability-linked (GSS/S) supply, in October.

Primary Market Activity

GSS transactions continued to outperform with regards to demand, achieving an average oversubscription (o/s) of 2.9x vs 2.3x for conventional.

On the innovation front, Bank of China issued a €300m 3yr Sr Unsecured ‘green transition’ bond; its second green transition bond after its inaugural dual tranche issuance (3Yr USD 500m / 2Yr CNY 1.8bn) in 2021. The proceeds will be used to refinance loans (total value of ~EUR 330m) to fund four steel projects in the Hubei province. Although a rare transition bond from the FI sector, a large proportion of the deal was purchased by the leads so the ESG-impact on the outcome of the deal was somewhat shrouded. 

Senior issuance remained at the top for GSS supply (11 transactions / €7.2bn eq.) followed by two covered bond transactions (€1.3bn eq). In addition, over 60% of issuers opted for EUR, but total issuance volume was equally split between EUR and USD (€4.2bn eq.).

Green (€6.4bn across 8 transactions) continued as the label of choice, despite three transactions (€1.4bn) being developed in social format, along with sub-benchmark transactions for Raiffeisen Bank (€300m Sustainability 4NC3 SNP) and Bank of China (€300m 3yr Snr ‘green transition’ bond). 

European Banks & Insurance GSS/S Issuance [1]

GSS/S activity fell in October in line with the wider market, however 2023 year-to-date (YTD) total volume remained up (18%) year-on-year (YoY); representing ~97% of 2022 total volumes. The sector is therefore on track for a YoY increase, continuing its unblemished record of annual increases. The sector observed an increase in FY22 vs 2021, contrary to many sectors / geographies.

Green issuance (c. €61bn) represents 79% of GSS/S issuance in 2023 YTD. It retains its longstanding dominance and remains in line with the past few years (c.75% for 2020 & 2021 and 85% for 2022). Social issuance has risen to 16% (+4ppt vs FY22), followed by Sustainability (4%) and a nominal contribution of other labels (Sustainability-Linked Loan Bond (SLLB), Transition).

European Bank and Insurance GSS/S Supply 2023 YTD

Source: Dealogic (01/11/23)

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

Source: Dealogic (01/11/23)

Global EUR/GBP FIG GSS Issuance [2]

  • EUR Senior: YTD GSS issuance is €52.5bn (+23% vs 2022 YTD), with total senior supply of €232.1bn (+23%); resulting in GSS as a % of total issuance of 23% - the same as 2022 YTD.
  • GBP Senior: YTD GSS issuance is £3.5bn (+312% vs 2022 YTD), with total senior supply of £28.5bn (+25%); resulting in an increase of GSS as a % total issuance to 12% (2022 YTD: 4%).
  • EUR Covered: YTD GSS issuance is €18.7bn (+9% vs 2022 YTD), with total covered supply of €181.2bn (-3%); resulting in small increase in GSS as a % of total issuance to 10% (2022 YTD: 9%).
  • GBP Covered: YTD issuance is nil (2022 YTD: £0.5bn), with total covered supply of £18.1bn (+36%); resulting in GSS as a % of total issuance of nil (2022 YTD: 4%).

Banking & Financial Institutions Sector Developments

Deutsche Bank published its initial Transition Plan which focuses on three areas: the bank’s own operations, supply chain and financing provided to clients. Alongside this, it published three additional net-zero targets.

  • Coal Mining: 49% reduction in Scope 3 financed emissions by 2030, and 97% reduction by 2050.
  • Cement: 29% reduction in Scope 1 and 2 physical emission intensity by 2030 and 98% reduction by 2050.
  • Shipping: scope 1 scoring of 0% achieved by 2030 and 2050 based on the Poseidon Principles Portfolio Level Alignment Score.


ING published its 2023 Climate Report which showcases its progress on the path to net zero and relevant developments in achieving its other climate action objectives.

CaixaBank launched a plan to promote the green transition of companies, with the goal to help companies implement sustainability by means of specific solutions and supporting them with advisory services. The plan is aimed at companies across sectors linked to the bank and with a turnover of up to €500 million.

DBS launched a hybrid financing solution to help small and medium enterprises finance their sustainability journeys. The DBS Eco Renovate Loan enables SMEs to borrow up to 100% of the cost of using resource efficient or energy optimising solutions for a green renovation, at preferential rates.

Commerzbank and the European Investment Bank (EIB) are entering into a new cooperation in the form of a guarantee programme to support medium-sized businesses. A total of €400 million will be made available to these companies and the EIB will provide guarantees covering up to 50% of the loan amount. Commerzbank notes that worldwide, access to finance for small and medium-sized businesses has become difficult due to the effects of the war in Ukraine, rising interest rates, inflationary pressure in supply chains, and the decline in the pandemic. 

Investor Developments

Mirova announced the launch of Mirova Energy Transition 6, its sixth strategy dedicated to energy transition infrastructure, as they look to raise up to €2 billion. It will aim to finance proven technologies while continuing to support the development of low-carbon electric mobility and hydrogen.

Franklin Templeton launched two green bond funds – Franklin Sustainable Euro Green Sovereign UCITS ETF and Franklin Sustainable Euro Green Corp 1-5 Year UCITS ETF – four years after its debut green bond fund.

Schroders has expanded its range of sustainable thematic funds with two Article 9 global equity funds – the Schroder ISF Circular Economy fund and Schroder ISF Sustainable Infrastructure fund.

Allspring Global Investments launched a Climate Transition Global Buy and Maintain Fund, its third climate transition fixed income fund. The fund is classified as Sustainable Finance Disclosure Regulation (SFDR) Article 8 and its approach is to deliver exposure to global fixed income opportunities focused on companies transitioning to a lower-carbon world.

Government and Regulatory Developments

The European Banking Authority (EBA) published a report on the role of environmental and social risks in the prudential framework. The report recommends risk-based enhancements to the risk categories of the Pillar 1 framework. Additionally, the report explains why the EBA does not support the introduction of a green supporting factor or a brown penalising factors at this stage.

The FCA welcomed the publication of the Transition Plan Taskforce (TPT) Disclosure Framework. It also stated that it is committed to drawing on the TPT Framework as they further develop their disclosure expectations for listed companies, asset managers and FCA-regulated asset owners.

The Financial Stability Board (FSB) published its annual progress report on climate-related disclosures. The report outlines that significant progress has been achieved on climate disclosures. It also highlighted encouraging progress on development of a global assurance, ethics, and independence framework for sustainability disclosures.

ESG and Credit Rating Agencies Developments

ISS ESG launched its EBA Pillar 3 ESG Solution for banks. The solution includes pre-set screens for the template requirements. Its dataset offers 275 factors, including climate, EU Taxonomy, and Sustainable Development Goal (SDG) datasets.

Sustainable Fitch published a report analysing the recent trends and the outlook for the sustainable fixed-income market related to biodiversity.

MSCI announced it’s signed a purchase agreement to acquire Trove Research. This will help accelerate MSCI’s goal to offer expanded climate solutions. 

Find out more

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Additional information

1 Includes European Bank & Insurance GSS/S Issuance

2 Source: NatWest Markets Syndicate (31/10/23), includes Global Financial Institutions EUR & GBP Issuance.

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