End of Virus Panic Mode Revives Slumbering Green-Bond Market

(Bloomberg) -- Europe’s green-bond sales are rebounding, after largely missing out on record-breaking credit binge fueled by coronavirus concerns.

Credit Suisse Group AG, E.On SE, and Swisscom AG are among six companies to have sold green bonds since the middle of last week, matching the tally for the preceding two months, according to data compiled by Bloomberg. Belgian waste-water company Aquafin NV is also readying a deal.

The recent pick-up suggests companies are moving beyond immediate coronavirus worries, as green bonds usually support long-term investments and they are of little use in a crisis due to restricted use of proceeds and lengthy preparation times. Greater supply is also a boon for ESG investors, whose choice in the primary market has been mainly restricted to governments and agencies selling Covid-19 response social bonds since the pandemic erupted.

“Companies are by and large in less of a panic mode than when corona first hit Europe and the U.S.,” said Arthur Krebbers, head of sustainable finance, corporates, at NatWest Markets in London. Investors also “want ‘a happier color’ of investment opportunities to complement Covid-related issuance,” he said.

E.On’s green bond on Wednesday had a higher order-book ratio, and greater price tightening, than two shorter conventional tranches in the same deal. Credit Suisse’s debut green bond was more than five times bid. E.On also sold a green bond at the end of March.

Appetite partly reflects confidence that bondholders will always be able to get a bid for a green note in the secondary market, Krebbers said. Demand has surged over the past few years as dedicated funds tap into the booming socially responsible investment market.

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