Credit Outlook 2022: Demand for ESG is insatiable – ING Think

Credit Outlook 2022: Demand for ESG is insatiable ING Think

ESG bonds no longer a bargain for companies GlobalCapital

A reality check on ESG — the UK is behind the curve Evening Standard

Ethical investing hits the mainstream – Jelle Brons | Livewire Livewire Markets

ESG and Institutional Investors: Part One | Bennett Jones LLP – JDSupra JD SupraCredit Outlook 2022: Demand for ESG is insatiable ING Think

ESG bonds no longer a bargain for companies GlobalCapital

A reality check on ESG — the UK is behind the curve Evening Standard

Ethical investing hits the mainstream – Jelle Brons | Livewire Livewire Markets

ESG and Institutional Investors: Part One | Bennett Jones LLP – JDSupra JD SupraCredit Outlook 2022: Demand for ESG is insatiable ING Think

ESG bonds no longer a bargain for companies GlobalCapital

A reality check on ESG — the UK is behind the curve Evening Standard

Ethical investing hits the mainstream – Jelle Brons | Livewire Livewire Markets

ESG and Institutional Investors: Part One | Bennett Jones LLP – JDSupra JD Supra

10 November 2021Read in 6 Minutes. The demand for ESG bonds continues to rise rapidly. Therefore, we expect ESG to outperform in secondary markets in 2022 In this article Surging demand Download article as PDF Surging demand Corporate ESG supply is set to increase to EUR100bn in 2022, of which EUR35bn is from sustainability-linked bonds. This will account for 35% total corporate supply by 2022. ESG demand continues to rise rapidly. We expect ESG to outperform secondary markets in 2022, even though we have very little greenium. ESG’s performance in primary markets will continue with a higher oversubscription and more greenium being price in. Spread differentials between vanilla bonds and ESG are very low. This is due to the compression in spreads over the last months, which has resulted in very little differential between most sectors and ratings. We expect greenium to increase in 2022. ESG spreads will outperform. Investors and issuers alike are adopting ESG as core financing or investment strategies. Covid has been a catalyst for this higher ESG demand. Over the long-term, we believe ESG outperforms as supply is slowing down and demand is insatiable. The trend is driven by fund flows, regulation, and supply. ESG vs overall Index shows very little greenium ING and ICE
The figures below show that the majority of inflows into Euro IG funds were into ESG funds. Non-ESG funds have seen outflows in general. It is also evident that many outflows from non-ESG funds were swapped to ESG funds within the same asset class. This was largely due to outflows that occurred during the Covid crisis. Since 2020, ESG funds have seen a significant 57.3% increase in their assets under management. Non-ESG funds, however, have seen outflows of 1.8%. ESG funds in USD have also seen inflows of 126.9%. Non-ESG funds however saw inflows of 20.3% of AuM. EUR ESG mutual funds inflows ING. EPFR

USD ESG mutual funds inflows ING, EPFR

ESG has outperformed in primary markets despite the fact that not enough greenium is being priced into secondary market. ESG bonds have been consistently oversubscribed relative vanilla bonds, and have seen more greenium priced in relative vanilla. ESG-linked bonds are slightly lower in sustainability than ESG in either. This trend will continue into 2022 and we may see even greater outperformance in turbulent market conditions. Higher oversubscription for ESG, SLBs ING and IGM

NIP in ESG, SLBs ING and IGM

We expect the green, sustainable, sustainability, and sustainable-linked bond market to continue growing in 2022 as governments, activists, and the EU’s new requirements for ESG reporting increase. Euro ESG corporate supply will reach EUR100bn by 2022, with EUR35bn from SLBs. The Energy sector will continue to be the driver of the surge, with c.EUR45bn ESG issuance as capital expenditure and projects related to the energy transition increase. The Euro ESG supply will account for 35% in total corporate supply by 2022. This article was originally published in our Credit Outlook 2022. This information may be available on our investment research website. However, MiFID and other restrictions might apply.

Read More