A new report by the Association for Financial Markets in Europe (AFME) finds that European bond and loan issuance fell 10% last year.
The key findings in the report are:
- European ESG bond and loan issuance accumulated €680bn in proceeds during 2022, a 10% annual decline predominantly driven by lower social bond issuance. ESG bonds and loans include ESG-labelled bonds (proceeds-based), sustainable-linked bonds, transition bonds, green-linked loans, and sustainable-linked loans.
- Green bond issuance grew 6% in 2022 notwithstanding the wider market turbulence of the year.
- Social bond issuance declined 40% in 2022FY. The strong participation of the French agency CADES did not offset the contraction in European Commission Social bond issuance.
- Sustainable bond issuance declined 12%FY, which is of similar proportion than the wider market contraction in non-ESG bonds during the year.
- Sustainable-linked bond declined 16% in 2022 notwithstanding a quarterly record amount in Q1’22.
- ESG securitisation issuance declined from €8bn in 2021 to €1.2bn in 2022.
- Global ESG Funds rose during Q4’22, after a sequence of quarterly declines during the first three quarters of the year.
- Funds with an ESG mandate (including Mutual Funds and ETFs) totalled $7.7tn as of Q4’22 a 18% decrease from Q4’21 ($9.4tn).
- The full-year contraction was driven predominantly by lower valuations as total outflows accumulated only $1bn during 2022.
- ESG price premia: spreads of corporate ESG bonds against non-sustainable benchmarks widened in the second half of the year from c1bps at the start of the year to c4bps in November 2022, before returning to c1bps in early 2023.