The year 2019 was a record breaker for sustainable finance issuance, with $269.5bn-worth of bonds sold that met the International Capital Market Association’s green, social or sustainability bond principles, according to Dealogic data. Last year was the first time that the $200bn mark had been reached, with a 51% increase in sustainable finance bond issuance compared with the $178.8bn raised in 2018. In particular, the second and fourth quarters were both record breakers, with $77bn and $77.05bn raised, respectively.
Green bonds (bonds that support projects with environmental benefits) remain the most popular type of sustainable finance bond, with $205.1bn-worth of green bonds issued in 2019. A further $16.7bn-worth of social bonds (bonds that support positive social outcomes) were issued, and $47.6bn-worth of sustainability bonds (a hybrid of green and social bonds).
Europe continues to lead the charge, responsible for issuing $131.4bn-worth of sustainable finance bonds, almost half of the 2019 global total. Among individual countries, the US came top with $42.8bn-worth. It was followed by China with $36.9bn-worth, actually a slight decrease on the country’s $38.2bn-worth of issuance in 2018.
The financial sector was the most active industry area in 2019, selling $129.1bn-worth of bonds, followed by the utility and energy sector and government issuers raising $41bn and $27.6bn, respectively.
German development bank KfW was responsible for issuing the largest batch of sustainable bonds of the year in May with its tranche of green bonds worth $3.36bn to support renewable energy and energy-efficient construction projects. Industrial and Commercial Bank of China (Hong Kong) issued the next largest tranche in September, with $3.01bn-worth of green bonds that will support renewable energy, clean transportation and sustainable water management projects.
Sustainable finance continues to be a growing area of focus for a range of investment banks. In 2019, Bank of America’s securities division topped the table of bookrunners for sustainable finance bonds by volume, acting for $16.7bn-worth of issuance through 96 deals. It was followed by HSBC, which was a bookrunner for issuance worth $15.57bn and 107 deals, and Crédit Agricole, with $15.44bn-worth through 100 deals.
