A new report says spreads are lower on sovereign debt from issuers with the best ESG ratings. Joint research from Verisk Maplecroft and Bluebay Asset Management claims that spreads can be up to 70% lower versus the benchmark, especially for weaker economy country debt.
More specifically, they find that a one point increase in governance scores leads to a 12% fall in spreads. However, environmental performance appears to matter less with countries performance having little or no impact on spreads, although investors do favour countries with greater reserves of natural resources and weaker environmental regulation.