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Over Half of SLBs Likely to Hit Targets

Analysis of the sustainability-linked bond (SLB) market by the Anthropocene Fixed Income Institute (AFII) has found a larger number of bonds will meet their sustainability performance targets (SPTs) this year than in 2023. To support investors in assessing the SLB market, the AFII reviewed 24 bonds to estimate the likelihood of their reaching or missing their SPTs. According to the think tank’s analysis, 14 bonds bonds already have or are likely to meet their SPTs. Four bonds, including ones issues by Coca-Cola and Eni, have a 50:50 chance of meeting them, while three bonds are unlikely to achieve their targets. The AFII noted that even if targets were missed, there could still be benefits for investors and issuers if the reason behind the failure was higher ambition for the bond. “We find that the SLB market continues to drive forward transparency and accountability, and offers an opportunity for investors to use fixed-income capital to support borrower-level transition,” the AFII said. The research also flagged that while overall volumes of SLBs have not yet regained the peak of 2021, issuances remain “significant for a product that emerged just five years ago”. SLBs’ usage, however, does remain frequent in high-emitting and hard-to-abate sectors – including industrials.

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