Europe’s ESG-linked corporate bond issuance to jump to 25% of total in 2021 from 8% in 2020

ESG-linked debt will make up at least a quarter of all European non-financial corporate bond issuance in 2021 compared with only 8% last year as momentum gathers behind social- and sustainability-linked fundraising as well as green bonds.

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ESG-linked issuance stood at 27% in Q3 and 23% for the first nine months.

Overall ESG-linked issuance was worth EUR 110bn in the first nine-months of the year, nearly double the total in 2020.

Leading ESG-linked bond issuers to date this year are Italian utility Enel SpA (EUR 10.1bn), central and eastern European real estate firm CTP NV (EUR 2.5bn), with EUR 2.0bn issues from Mondelez International Inc., Energias de Portugal SA and rival Spanish utility Iberdrola SA.

“Companies in the utilities, real estate, consumer goods and transportation & logistic sectors continued to be the most active issuers of ESG-linked bonds in Q3 2021 by volume,” says Eugenio Piliego, analyst at Scope Ratings. “Utilities largely dominated ESG issuance this year and last, but this year also real estate companies have so far caught up fast,” says Piliego.

The proportion of ESG bonds issued rose across most sectors in the first nine months.

“Regular issuance from some other sectors is emerging, notably the chemicals sector,” says Klaus Kobold, analyst at Scope. Nobian NV and Evonik Industries AG tapped the market for ESG-linked debt of EUR 525m and EUR 500m respectively in the third quarter, following the likes of Air Liquide SA, DSM NV and LANXESS AG. Besides chemicals companies, retail and telecoms firms have shown significantly more appetite for issuing ESG-linked bonds compared with last year.

For more analysis of recent issuers in Q3 2021 such as Enel Spa, Engie SA, A2A Spa, Wingholding Zrt, Valeo SE, Hell Energy Kft, Baromfi Coop Kft, Stavmat Zrt please consult Scope’s investor platform ScopeOne for subscription ratings.