Menu
Banking Exchange Magazine Logo
Menu

Impact Bonds Could Break 2020 Record

The impact bond market could grow to $2 trillion this year, says Insight Investment

  • |
  • Written by  Banking Exchange staff
  • |
  • Comments:   DISQUS_COMMENTS
Impact Bonds Could Break 2020 Record

A record $500 billion in impact bond issuance was added to the market in 2020 and a review by fixed income specialist Insight Investment suggests this could be “easily repeated” this year.

According to the report, government-related issuance made up more than half of 2020’s total at $260 billion.

Financial companies added $121 billion and was the first sector to exceed the $100 billion mark on an annual basis, while utilities issued $57 billion, a 19% increase on 2019.

Driven by the global response to Covid-19, the most radical increase in issuance was in social bonds, marking an almost nine-fold rise to $161 billion in 2020, up from $18 billion in 2019. Consumer staples and energy sectors fell back by 50% and 35%, respectively.

Most issuance during the year came from France at 18% of the overall total and twice that of the next nearest countries – Germany and the US – at roughly 10% each.

South Korea, Japan and China accounted for 12% of collective issuance. The UK ranked in 15th place but could gain impetus from the government’s plans to issue a ‘green gilt’, according to Insight.

Joshua Kendall, head of responsible investment research and stewardship at Insight Investment, however, warned investors of “greenwashing” as the Insight Investment report found that approximately 10% of impacts evaluated by the company received a ‘red’ score and 40% a ‘green’ score.

In 2020, green bonds remained the biggest impact bond category, at 53% of issuance, while sustainability-linked bonds increased by 67 % on 2019.

Separate research by Dutch asset manager NN Investment Partners published last year indicated that bonds linked to social themes had increased in popularity during the early stages of the Covid-19 pandemic.

Nordic bank SEB has forecast the green bond market to raise $500 billion this year.

back to top

Sections

About Us

Connect With Us

Resources

Webinar: From KYC to IDV

How three leading banks are utilizing cutting-edge
digital tools to onboard, win, and wow customers

Time/Date: June 23, 2021 11:00 a.m. ET

Digital adoption, already moving at warp speed, accelerated seven years into the future during the COVID-19 pandemic. As the number of bank branches continues to fall, with at least one study predicting all branches will disappear by 2034 (Fox Business) and foot traffic declining (Vox), today’s most innovative banks are charting a new, digital-first path to win over customers while increasing security, meeting KYC compliance requirements, and winning customers to drive revenue.

In this webinar, you’ll hear from John Baird, Founder & CEO of Vouched, Tyler Crawford, COO of Bankers Healthcare Group, Anand Sathiyamurthy, CPO of Flagstar Bank and Daniel Sheehan, Chairman & CEO of Professional Bank as they describe their vision for digital transformation and how customer expectations are changing to digital first. They’ll also explore how fostering an innovation mindset creates new ways to tackle complex KYC problems and allows them to quickly compete in new markets and win customers.

REGISTER NOW!

This webinar is brought to you by:
Vouched Logo