ESG Loans

ESG Loans

Keith Mullin

35 years: Capital markets editorial

We saw huge growth in the ESG bond market in 2020, with headlines focused on new COVID-19 sustainable debt issuances. In this video, Keith gives an overview of the parallel growth of ESG loans, which isn’t covered nearly as much by the mainstream media. He also discusses the size of the market and the types of loans, and then finishes by discussing a few recent ESG loan transactions.

We saw huge growth in the ESG bond market in 2020, with headlines focused on new COVID-19 sustainable debt issuances. In this video, Keith gives an overview of the parallel growth of ESG loans, which isn’t covered nearly as much by the mainstream media. He also discusses the size of the market and the types of loans, and then finishes by discussing a few recent ESG loan transactions.

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ESG Loans

16 mins 6 secs

Overview

Over the past few years, the environmental, social, and governance (ESG) capital markets have become more significant across a variety of product sets. ESG bonds, which according to Refinitiv witnessed 428 billion dollars in new supply in 2020 up until mid-November, have attracted the most attention. The impressive parallel growth of ESG syndicated loans over a much shorter time frame has received less attention. ESG loans come in two types: green loans, which are use-of-proceeds facilities that finance specific pools of ESG assets; and sustainability-linked loans, known as SLLs. Europe dominates this market, with 70% of global volumes; Asia-Pacific accounts for a little less than 20%.

Key learning objectives:

  • Define what an ESG syndicated loan is and who uses them

  • Explain the types of ESG loans

  • Outline the codes of each market sub-segment in the ESG capital markets

  • Understand sustainability-linked loans through the case study of the Italian energy utility, Enel

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