European green, social and sustainability (GSS) bond issuance will reach between €1.4tr and €1.6tr, accounting for close to 50 per cent of the total European bond issuance, by 2026.

The figures come from a PwC Luxembourg report, ESG - Transformation of the Fixed Income Market, that based on a survey of 100 investors and 100 issuers.

In 2021, total GSS bond new issuance in Europe reached a new record of €500bn representing 13.7 per cent of total bond issuance. However, the findings from the PwC report suggest further rapid growth in issuance by new and existing players in both the public and private sectors, drawn by reputational benefits and access to a broad and committed investor base.

Green bonds are forecasted to reach €EUR 691.2bn of new issuance by 2026 in base case scenario, with social bonds accounting for €317.1bn and sustainability bonds accounting for €391.8bn.
According to the survey, 82 per cent of issuers selected green bonds as the top GSS bond to issue in the next 24 months.

Public Sector (sovereign and supranational) investment has dominated GSS issuance and PwC predicts public sector GSS issuance will reach €712bn by 2026 – up from €266bn in 2021 – driven in part by the European Commission’s green bond issuance programme to finance the EU’s NextGeneration EU plan.

Significantly, two-thirds (67 per cent) of PwC’s surveyed issuers have experienced higher oversubscription for GSS bonds in comparison to their plain vanilla counterpart, reflecting clear investor demand.

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