Press Release, Luxembourg, 3 May 2022
New data from PwC Luxembourg forecasts European Green, Social and Sustainability (GSS) bond issuance to reach between EUR 1.4tn and EUR 1.6tn – accounting for close to 50% of the total European bond issuance, by 2026.
The report, titled: ESG - Transformation of the Fixed Income Market provides an in-depth overview of the sustainability evolution across fixed income markets in Europe, with the insights generated through a detailed survey of 100 investors and 100 issuers.
In 2021, total GSS bond new issuance in Europe reached a new record of EUR 500bn representing 13.7% of total bond issuance. However, the findings from the PwC report suggest further rapid growth in issuance by new and existing players in both the public and private sectors, drawn by reputational benefits and access to a broad and committed investor base.
Andrew McDowell, Partner, Strategy& Luxembourg - “Ever since the European Investment Bank issued the first green bond in 2007, followed quickly by the World Bank, GSS bonds have grown up from a niche market dominated by international financial institutions into a mainstream asset class. With investors showing no limits to their appetite for GSS bonds, and with more and more public and private issuers seeing the reputational and funding advantages of accessing the GSS market, it is plausible that GSS bonds could account for almost half of total European bond issuance by 2025.”
Olivier Carré, Financial Services Market Leader and Sustainability Sponsor at PwC Luxembourg - “The political and regulatory shift in the EU triggers a seismic shift re-directing capital flows towards sustainable economic activities. This changes the strategic relevance of the GSS bonds instrument. In particular, for CFOs of companies in transition towards more sustainable activities or with a mixed business book, the issuance of GSS bonds can help financing such transition and qualify as eligible investment for investors subject to SFDR and EU Taxonomy.”
Read the full report ESG - Transformation of the Fixed Income Market ESG
Notes to editors
The report surveyed a range of market participants throughout the year 2021, including bond issuers and investors. The issuer segment includes small and large companies with 16% of the survey respondents having issued more than EUR 5bn in GSS bonds. The sector composition of the issuer survey includes - non-financial institutions (40%), financial institutions (33%), supranational institutions (10%), sovereign entities (10%) and central banks (7%).
The investor segment of the survey included feedback from large and small firms, with 14% of the survey respondents having an AuM over EUR 500bn. The respondents come primarily from Europe (93%) and the sector composition includes – Asset/wealth managers (24%), insurance companies (21%), pension funds (19%), sovereign wealth funds (10%), investment funds (10%), banks (11%), and family offices (5%).
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About PwC
Pauline André
Director, Head of Marketing & Communications, PwC Luxembourg
Tel: +352 49 48 48 3582