Issuance of Impact Bonds
The Intercontinental Exchange (ICE) recently released the 2022 Global Impact Bond Report, which analyzes the issuance and certification of impact bonds. ICE defines impact bonds as green bonds, social bonds and sustainable development bonds declared by the issuer or certified by a third party. Their investment characteristics are very similar to impact investment.
From the perspective of issuance, despite the impact of interest rate hikes by the central bank and inflation around the world, the total issuance of global bonds decreased by 60% (compared with 2021), but the issuance of impact bonds only decreased by 13% (the issuance of impact bonds was 773 billion US dollars in 2022 and 122 billion US dollars in 2018, indicates an increase of nearly six times in five years), of which the issuance of green bonds only decreased by 1% (the issuance of green bonds accounted for 63% of the total issuance of impact bonds).
At present, the total issuance of global impact bonds is close to $3 trillion, but compared with the huge global bond market, the proportion of impact bonds is only 4% (in 2021, the proportion is 2%). In terms of the certification of impact bonds, 88% of the impact bonds in the whole market have obtained third-party certification (84% in 2021), and the other 12% are directly defined by the issuer.
Among the impact bonds, the issuance of green bonds accounts for the highest proportion. In 2022, the global green bonds issued a total of 487 billion US dollars, accounting for 63% (55% in 2021). Of these, 93% have been certified by third parties (88% in 2021).
China issued US $102 billion of green bonds throughout the year, making it the largest issuer of green bonds. Of these, 86% have been certified by third parties (76% in 2021). Germany and the Netherlands ranked second and third respectively.
Bond Distribution in Different Regions and Countries
There are differences in the issuance of impact bonds in different regions:
- Europe: total issuance of US $405 billion. It remains the largest impact bond issuance region in the world;
- Asia: total issuance of US $241 billion. It is the only positive growth region (compared with 2021);
- Americas: total issuance of US $92 billion. Due to the impact of anti-greenwashing policies, the amount decreased significantly;
From the perspective of country category, the top countries of global impact bond issuance are:
- China: issued US $111 billion, 48% increase compared to 2021;
- Germany: issued US $84 billion, 11% increase compared to 2021;
- France: issued US $80 billion, 23% decrease compared to 2021;
- The United States: issued US $45.3 billion, 35% decrease compared to 2021;
Types of Different Impact Bond Issuers
From the perspective of issuers, government agencies and enterprises each account for half of the total issuance, but government agencies issue more bonds each time, and the total number of bonds is less than enterprise. In addition, the issuance of impact bonds by financial institutions and public sector is also relatively high.
Performance of Impact Bond Index
From the perspective of index performance, the trend of impact bond (the ICE impact bond index fell 17% last year) and the overall bond index (the ICE broad market index fell 17% throughout the year) are relatively consistent. In the specific classification of impact bonds, the sustainable bond index fell 14%, while the green bond index and social bond index both fell 18%.
The reason why the sustainable bond index performs better is that its duration is lower than the other two indexes, so it will be less affected in the environment of rising interest rates.
Reference:
