Sustainaweekly - Bund greeniums at all-time lows
In our latest edition of the Sustainaweekly, we start by assessing whether there is a financial premiums evident in German government bonds. These greeniums do exist but are modest. Indeed, at the longer-end of the curve they have fallen to all-time lows. We then go on to look at last week’s ESG bond issuance, where SLBs were prominent. Our strategists take a close look at the structures and targets and compare them to peers. On the regulation side, we assess the challenges to investors of the SFDR. Finally, we present an analysis of heat pump trends in the Netherlands, where a strong upward trajectory has been taking shape and is set to continue.
Co-author: Jolien van den Ende
Strategy Theme
German green government bonds allow for good estimates on the level of the greenium, given their “Twin Bunds” structure. We find that Greeniums still exist and they are larger for the 5y area. However, the greeniums for the 10y and 30y areas are at all time lows. This might be explained by the flatness of the curve.
ESG Bonds
SLBs accounted for almost half of the total volume of last week’s issuance in the EUR IG corporate bond market. Pernod Ricard, Sanofi, CEZ – and in the private-equity space – EQT – all issued SLBs. We take a closer look at the structures of the new SLBs.
Policy and Regulation
The European authorities published last week an updated statement on the application of the Sustainable Finance Disclosure Regulation (SFDR). The SFDR aims to impose mandatory ESG disclosure obligations for financial market participants and financial advisers. We look at some of the challenges facing investors.
Company and Sector news
Heat pumps are gaining popularity and importance in the built environment transition. The installation of heat pumps can be a good step towards carbon neutrality. But at the same time, this requires higher energy efficiency of buildings through insulation.
ESG in figures
In a regular section of our weekly, we present a chart book on some of the key indicators for ESG financing and the energy transition.