Sustainable finance bonds increased to an all-time annual record US$544.3 billion in 2020, or more than double the volume in 2019. Issuance during the fourth quarter totalled US$180.4 billion, representing the highest quarterly total by proceeds since the service provider Refinitiv started tracking the data in 2015.
Based on the Refinitiv figures released on January 18, Asia-Pacific issuers accounted for 16% of the total issuance volume of sustainable finance bonds, trailing issuers from Europe, which accounted for the largest share at 56%, while those from the Americas contributed 26%.
Green bond issuance rose 26% from 2019 to a new record high of US$222.6 billion. This was achieved despite a slowdown in the deal flow in the fourth quarter of 2020, when volume fell 22% from the previous quarter to US$63.3 billion
Driven by higher capital raising by sovereigns, multilaterals and banks for Covid-19 relief and recovery efforts, issuances of sustainability bonds and social bonds each exceeded US$100 billion for the first time.
A total of US$164.2 billion worth of social bonds were raised globally in 2020, or nearly 10 times the amount issued in the previous year. Social bonds accounted for 30% of the sustainable finance bond market in 2020, compared with only 5% a year earlier. Sustainability bond issuance, on the other hand, reached US$127.6 billion in 2020, or more than triple the amount raised in the preceding year.
Agency and sovereign issuers accounted for 56% of the overall sustainable finance issuance activity during 2020 – the highest percentage ever recorded, while corporates accounted for 43%.
In terms of arrangers, J.P. Morgan moved into the top spot for sustainable finance bond underwriting in 2020 with a 6.3% market share, followed by BNP Paribas with 5.8%, Credit Agricole CIB 5.7%, Citi 5.4% and HSBC 5.3%.
Sustainable lending also increased in 2020, rising 3% from a year ago to US$199.4 billion. Like in sustainable finance bonds, Asia-Pacific borrowers accounted for the smallest share of sustainable lending with 14%, compared with the 64% contribution by the European borrowers and 16% by the Americas.
BNP Paribas maintained the top spot for sustainable syndicated lending in 2020, with a 5.9% market share, followed by Mitsubishi UFJ Financial Group with 4.8%, Sumitomo Mitsui Financial Group 4.5%, Mizuho Financial Group 4.2% and Societe Generale 3.7%.
Equity capital markets
Meanwhile, equity capital markets activity for sustainable companies surged 65% to US$13.8 billion in 2020, compared with a year ago – again a new record high for the sector – despite a sluggish issuance activity in the fourth quarter, when the volume declined by 24% from the previous quarter to US$4.2 billion
The Americas accounted for 62% of overall equity capital markets activity in 2020, followed by Europe with 23% and Asia-Pacific with 11%. Morgan Stanley topped the list of bookrunners with 17.7%, followed by BofA Securities with 15.6%, J.P. Morgan 12.9%, Barclays 9.6% and Wells Fargo 5.9%.
Mergers & acquisitions activity involving sustainable companies declined to a three-year low in 2020, falling 9% from 2019 to US$32.3 billion. A total of 497 sustainable deals were announced last year, a slight drop of 1% from 2019. By number of deals, China accounted for 20% of the total sustainable deal-making activity in 2020, followed by the United States with 9%, and India and Italy 7%. By deal value, Europe topped the league table with 43%, followed by Asia-Pacific with 33% and Americas 23%.
Goldman Sachs was the leading advisory bank as it was involved in eight transactions valued at US$6.2 billion. J.P. Morgan came in second with five deals valued at US$4.4 billion, followed by Nomura with six deals worth US$3.6 billion, Morgan Stanley five deals (US$3.3 billion) and Lazard seven deals (US$2.9 billion).