Refinitiv, an LSEG business, has just published its Sustainable Finance Review for the first half of 2023, providing an overview of global sustainable financing and advisory activity.

Cornelia Andersson, group head of sustainable finance and investing at LSEG believes that sustainable finance is a growing market segment due to regulatory and market change as firms pursue their climate and net zero transition strategies.

In a turbulent market environment, sustainable finance bonds performed comparatively well with growth of 6 per cent driven by green bonds being up 18 per cent over last year. This compares with a 5 per cent decline in overall global debt capital markets activity, the firm, which is a provider of financial markets data and infrastructure, said in a statement.

Sustainable finance bonds totaled $458.5 billion during the first half of 2023, an increase of 6 per cent compared with 2022 levels, and the strongest first half for sustainable finance bonds since the first half of 2021, the firm continued. By number of issues, sustainable finance bond volume decreased 16 per cent compared with the first half of 2022. As a percentage of global debt capital markets proceeds, sustainable finance bonds accounted for 10 per cent of overall DCM activity during the first half of 2023.

During the first half of 2023, green bond issuance totaled $267.1 billion, an 18 per cent increase compared with levels a year ago and the strongest half for green bond issuance since records began in 2015. Social bond issuance totaled $58.6 billion during the first half of 2023, a 3 per cent increase compared with the first half of 2022.

Sustainability bond issuance reached $78.8 billion during the first half of 2023, a 6 per cent decline compared with 2022 levels. The number of sustainability bonds decreased 42 per cent compared with the first half of 2022, marking a three-year low.

European issuers accounted for the largest regional market for sustainable finance bonds with 54 per cent market share during the first half of 2023, compared with 22 per cent from Asia Pacific and 16 per cent from the Americas.

BNP Paribas took the top spot for sustainable finance bond underwriting with 6.4 per cent market share during the first half of 2023, an increase of 1.1 market share points compared with a year ago, the firm said. Citi moved into second place from sixth and Credit Agricole moved from fifth place to third to round out the top three bookrunners during the first half of 2023. The top 10 sustainable finance bond underwriters comprised 41.7 per cent of the overall market during the first half of 2023, on a par with last year's levels.

Syndicated loans
Sustainable lending totaled $304.3 billion during the first half of 2023, a 20 per cent decline compared with the first half of 2022 and the slowest first half for sustainable lending since the first half of 2020. The second quarter of 2023 registered a 17 per cent increase compared with the first quarter of this year. By number of offerings, the first half of 2023 saw a 13 per cent decrease compared with the first half of 2022 and a two-year low.

American borrowers accounted for 44 per cent of overall sustainable lending during the first half of 2023, led by facilities for Ford Motor Co, NextEra Energy and Alphabet. Lending in Europe accounted for 34 per cent of first half 2023 activity, down slightly from 35 per cent during the first half of 2022, while Asia Pacific lending accounted for 14 per cent of activity.

Mizuho Financial Group took the top spot for sustainable syndicated loan-mandated arrangers during the first half of 2023, with 5.8 per cent market share, an increase of 1.8 market share points compared with a year ago, followed by Mitsubishi UFJ Financial Group with 4.5 per cent and Credit Agricole with 4.2 per cent. Citi and BNP Paribas rounded out the top five mandated arrangers during the first half, each with 4 per cent market share.

Equity capital markets
Equity capital markets activity for sustainable companies totaled $14.3 billion during the first half of 2023, the firm said, slightly ahead of first half of 2022 levels and a two-year high. By proceeds, second quarter 2023 sustainable equity issuance fell 38 per cent compared with first quarter 2023 levels but registered a 9 per cent increase by number of deals compared with the first quarter of the year. By number of issues, sustainable ECM offerings increased 50 per cent from a year ago. 

Asia Pacific accounted for 43 per cent of overall sustainable equity capital markets activity during the first half of 2023, bolstered by three of the top 10 ECM offerings so far this year. Huatai Securities, China Securities and BofA Securities topped the list of bookrunners for sustainable equity offerings during the first half of 2023, registering a combined market share of 33 per cent, the firm continued.

Mergers and acquisitions
Mergers and acquisitions activity involving sustainable companies totaled $84.2 billion during the first half of 2023, a 13 per cent decline compared with first half 2022 levels and a three-year low. Eight hundred and twenty deals were announced during the first half of 2023, on par with levels seen a year ago. By number of deals, China accounted for 17 per cent of total sustainable deal-making activity during the first half of 2023, followed by the United States and India, the firm continued.

Based on deal making involving targets or acquirers operating in sustainable industries, Chardan Capital Markets and JonesTrading topped the advisory league tables during the first half of 2023, while Citi rounded out the top three financial advisors with an industry-leading 12 deals valued at $11.6 billion. Special purpose acquisition company business combinations accounted for 39 per cent of M&A involving sustainable companies, by value, during the first half of 2023, the firm concluded.