Whitepaper

The global spread of COVID-19 has led to an increased appetite among bond investors for responsible investment options, with governments around the world rolling out unprecedented stimulus packages, thus further providing support to investors. Precipitated by the pandemic, investors are changing their outlook over the percentage of proceeds used to finance new projects and have identified a significant opportunity by committing to social projects and initiatives. The attached note explains the growth in social bonds volume during the year, and why we think financing through social bonds is set to become the next growth frontier for investment banks.

Key Takeaways

• In the coming months, we expect social bonds market to emerge at the fastest pace, which
  would take the total share to beyond the current c.24% of total ESG volume (c. USD52bn)
• Economists agree that the pandemic has caused a huge shakeup in financial system and
  has acted as a big stimulus for Social Bonds
• Corporations and financial institutions will become more active in the social bond market
  as the pandemic accelerates private issuers' interest in social considerations
• We see a strong case for funds to be directed towards social investments, however we are
  yet to see how the balance between green and social investments continue in the market


Author

Tanika Gupta

Delivery Lead, Investment Banking

Tanika is a delivery lead in the Debt Capital Markets practice at Acuity Knowledge Partners. She has expertise working with investment banks, providing support on weekly bond market updates, bond pricing, covenant comparison, debt maturity profiles, preparing pitch books and capital structure analysis. She supports the global DCM teams of a major European investment bank and has developed good understanding of the investment grade and high yield markets across the US, EMEA and Asia ex-Japan G3 markets.

Tanika holds a MBA in Finance from Jaypee Business School, Noida and earned her B.Com from CSJM University, Kanpur. She is passionate about dancing and has actively participated in various cultural activities at organizational level.

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