In September 2014, the first sustainable Pfandbrief was issued, which was also the first ever sustainable covered bond. This still relatively young market segment was therefore able to celebrate its tenth birthday in September 2024.
The new issue volume of sustainable Pfandbriefe and covered bonds was exactly EUR 14bn as at 24 September 2024. This means that this year’s new issue volume is slightly below the comparable figure for the same period last year. The covered bond market is also lagging behind the market for unsecured bonds. While the share of sustainable covered bonds in new issuance volume year to date is around 10%, the share of sustainable new senior and subordinated bank bond issues has consistently exceeded 20% in each year since 2021.
Germany and France remain the two countries with the highest volumes. Compared to the two very strong previous years, the issuing activity of the German Pfandbrief banks has fallen slightly so far in 2024. With new issues with a volume of EUR 4.75bn, German issuers are still slightly ahead of French covered bond issuers up to 24 September 2024. In terms of volume outstanding, sustainable covered bonds from Germany are also ahead of their French counterparts at EUR 27.3bn, making them the largest country segment. The growth rate for the outstanding volume of sustainable covered bonds is currently still well into positive territory at 14%. However, the volume of maturing sustainable covered bonds will increase systematically in future. This means that market growth is likely to slow noticeably in the coming years.
Solid new issue volume in 2024 after record year 2023
Most sustainable new issues to date have come from Germany and France
Around five years after issuing the first sustainable Pfandbrief, the Association of German Pfandbrief Banks (vdp) published requirements for Green and later also Social Pfandbriefe. These standards were updated in 2024, whereby the changes will apply to all new issues from 1 January 2025 (for sustainable Pfandbriefe issued before this date, the requirements applicable at the time of issue will continue to apply). With regard to market standards, the vdp has criteria for Social Pfandbriefe and Green Pfandbriefe in Germany. Both are based on the principles of the International Capital Market Association for sustainable bonds.