In the first quarter of this year the strong growth in sovereign GSS bondsi.e. bonds issued by states and other government organizations linked to the SDG objectives which include Green, Social, Sustainability and Sustainability-linked Bonds. Over 40 issuers sovereigns who have issued this type of bond worth over 500 billion dollars. This is what emerges from the latest GSS Bonds Market Trends report Mainstreet Partnersa London-based company specializing in ESG tools and impact data.
2023 is a record year
The performance of the first quarter of this year a record-breaking 2023 follows. “Sustainable” sovereign bond issues totaled single digits last year record of 160 billion dollars, representing a percentage of 31% of the overall GSS Bonds issued in 2023.
The majority of emissions are denominated in euros or dollars, both due to the size of these markets and the greater interest that the European Union, for example, has in the energy transition and climate objectives. The maturities of this type of bond tend to be longer, as they are intended to finance projects that take up a longer period of time.
One third of the sustainable bond market
Sovereign and supranational issuers cover just over a third of the entire “sustainable” bond market. Corporate issuers cover approximately 63% of the entire market and this also explains why green issues are the most used. Government issuers represent 22% of the market and supranational ones 15%.
Which types
The sovereign segment is more inclined to issue the category of Green Bond, which represent approximately 73% of GSS issues by sovereign issuers, compared to 61% by corporate issuers and 40% by supranational issuers. THE Sustainability Bond they represent the second most tested category, representing 21% of sovereign GSS emissions. Least used i Social Bonds (represent only 5% of issues) and sustainability-linked bonds (1%).
Although the “green” category is the most used, many sovereign issuers have also shown interest in Sustainability Bonds in recent years. This is the case of Mexico, the first sovereign issuer to have placed Sovereign SDG Bonds.
Which projects are intended to finance
There are important geographical differences in the use of resources generated by Bond GSS placements, depending on the sensitivity that each country or continent has towards certain issues and not others. For example, in Asiaa large portion of emissions (30%) is intended to finance projects related to green buildings (Green Buildings), while in Europe there is a lot of funding (43% of the total) directed towards sustainable mobility. In Africathe majority of resources (39%) are allocated to infrastructure for water management.
