Coronavirus crisis offers green and social bonds chance to prove their worth
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Coronavirus crisis offers green and social bonds chance to prove their worth

Green bond issuance slows in market turmoil, while social bonds offer means to finance Covid-19 responses.


The ups and downs of green bond issuance

Green bonds have held up relatively well in the market turmoil of recent weeks. 

The ICE BofA Green Bond Index lost 5% in total return between the end of February and March 20, while the broader ICE BofA Global Corporate Index was down 11%. 

Much of this outperformance down to the defensive nature and higher ratings of the constituents of the Green Bond Index compared with its corporate counterpart: the former includes a significant number of industrials and utilities.

Unsurprisingly, UBS analyst Thomas Wacker says his team expects green bonds: “To exhibit lower volatility and smaller drawdowns compared to non-green bonds during periods of market stress.”

However, green bond issuance has been quieter due to market volatility. There has been a recent flurry of investment grade issuance from blue chip corporates such as PepsiCo and Unilever as firms try to lock in funding in anticipation of prolonged market disruption.  


Cristina Lacaci,
Morgan Stanley

However, just $1.8 billion in green bonds was launched in March according to the Climate Bonds Initiative.

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