Sustainability in fixed income is a rapidly evolving market. Despite being in its nascency, 2020 was a significant year with Green, Social and Sustainable bonds (“GSS”) and Sustainability-Linked Bond (“SLB”) issuance reaching multiples of previous years, and 2021 is forecast to expand exponentially. This article serves as an introduction to this growing sector of the market.

The key difference between GSS bonds and SLBs is the use of proceeds (“UoP”). GSS bonds must have a specific UoP to finance green and/or social projects, whereas SLBs can be for general corporate purposes, but with a potential step up or down in coupon linked to achieving KPIs of broader sustainability metrics. While there is no regulatory oversight, key market guidelines have been issued by the International Capital Markets Association (“ICMA”) covering GSS and SLBs, and most bonds fit within these standards.

Read the full article where we look at:

• GSS bonds
• Sustainability-linked bonds
• Greenium
• Accessing the market and impact on portfolios

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