Because there will be a boom in green bonds. Intesa Sanpaolo Report
All the factors on the appeal of green bonds according to an analysis by Intesa Sanpaolo's studies and research department
The pandemic that has engulfed the world's economies, investments in health and research and wage subsidies granted in this period are just some of the examples of social impact spending that have prompted many public and private entities to finance themselves on the market through the social media tool. bond. This is what emerges from an analysis by the Intesa Sanpaolo study and research office .
THE NUMBERS OF SOCIAL BOND
“During the current year, social bond issues have quintupled compared to 2019, a much higher growth than that recorded in green bonds in the same period. The outstanding issues of social bonds, in fact, went from around 36 billion euros in 2019 to the current 157 billion. In addition to the contingent factors dictated by the pandemic, the consolidation of market standards has also encouraged growth ”, reads the analysis of Intesa Sanpaolo's studies and research department.
WHAT THE INTESA SANPAOLO REPORT SAYS
The European Union has provided further impetus to the development of the market “by issuing four SURE social bonds starting from October for a total amount of 31 billion euros aimed at supporting the Member States most affected by the pandemic. The first two SURE social bonds of October with a maturity of 10 and 20 years received orders for more than 233 billion and were issued for a total of 17 billion ”, underline the economists of Intesa Sanpaolo's research office. Last week, however, the European Union placed two bonds with a maturity of 5 and 30 years for a total of 14 billion. The bonds received total orders for 140 billion. According to the statement by the European budget commissioner Johannes Hann, "the European Union has already reached the social emissions target for 2020, therefore the remaining 57 billion will be placed in the course of 2021".
THE NEWS OF 2021
Starting from January 1, 2021, the ECB will accept bonds with coupons linked to performance with respect to one or more sustainability objectives and in line with the European taxonomy and / or with the objectives set out by the United Nations (United Nations Sustainable Development Goals). Furthermore, the bonds may also be admitted to the PEPP or EAPP programs if they meet the eligibility criteria, the report recalls.
THE GLOBAL MARKET
In this context, the global green bond market has reached “an outstanding stock of 760 billion euros. Green debt issues grew significantly in the third quarter reaching 80 billion euros from 40 billion placed in the second quarter. The total net issues made from the beginning of the year to date amounted to 214 billion and already exceeds 175 billion in 2019. Government issues also grew by 33% compared to 2019 thanks to the entry of new issuers ", reads the Intesa report. St. Paul.
THE EU COUNTRIES
The EU countries, of course, are at the forefront in this sector. The German government, after having placed the first ten-year green Bund for 6.5 billion euros, issued a new 5-year green Bobl for 5 billion euros at the beginning of November, becoming the second European country by amount issued after France. Spain, according to the Treasury's advances contained in the draft funding plan for 2021, will place the first green bond in 2021. The green bond will be issued on the long stretch of the curve, at 20 or 25 years. Great Britain will do the same.
ITALY: FIRST GREEN BOND IN 2021
“Italy will most likely place the first green BTP at the beginning of the year. The issue could involve both institutional and retail investors and, as declared by the MEF, will finance six sectors: renewable energy, transport costs linked to a reduction of CO2 emissions, pollution prevention and circular economy, environmental protection and biodiversity, for research related to the sectors listed. The Green Bond Framework will be published in the coming weeks ”, write Intesa Sanpaolo analysts.
THE GROWTH OF DEMAND WITH THE EXPANSION OF SUSTAINABLE INVESTMENT FUNDS
But what are the factors that have allowed this strong growth? The pandemic has "strengthened the demand for investments that take into account environmental, social and governance factors, underlining the importance of sustainable and resilient business models", reads the report.
According to Morningstar data, also quoted by the Intesa Sanpaolo report, the sustainable asset management sector "proved resilient during the pandemic and global net flows into sustainable funds were positive (+ $ 45.6 billion) in the first quarter of 2020 , against net redemptions of 384.7 billion from traditional instruments. In the second half of the year, flows were further positive and amounted to 71 billion dollars, of which 86% is represented by European investors. Sustainable investment funds, globally, have reached total assets for a value of 1 trillion dollars and have grown by 35% compared to the end of December 2019 ".
SUSTAINABLE FUNDS IN THE WORLD
The number of sustainable funds currently active around the world stands at 2,183 funds, the report said. “Since 2015 ESG funds have started to grow and in the last 3 years alone, more than 200 funds have been launched per year. Since January 2020, 192 new investment funds have been created despite the year being crossed by the health crisis. If we consider the breakdown of funds by type of investment asset, 65% of the total is made up of equity funds and almost 20% of fixed-income funds, while 8% has a mixed portfolio allocation. Almost half of sustainable fixed-income funds have diversified investment portfolios on the different categories of debt (corporate, government, ABS, corporate loans, convertible), however, 28% have portfolios mainly concentrated on corporate issuers and 18% on governmental ".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/perche-ci-sara-il-boom-dei-green-bond-report-intesa-sanpaolo/ on Mon, 30 Nov 2020 08:20:26 +0000.