The fixed-income markets have seen a substantial rise in the issuance of green, social, sustainability, and Sustainable Development Goal (SDG) bonds in the past few years. These types of bonds, referred to collectively as thematic bonds, are akin to common fixed-income securities with the main difference being that the projects financed from the issuance of such bonds aim to generate high environmental and social benefits. Thus, thematic bonds have the potential to contribute to the implementation of the 2030 Agenda for Sustainable Development.
The signing of the Paris Agreement in 2015 was in part responsible for triggering the emergence of green bonds. The Agreement brought to the forefront the urgent need for global institutional investors to join the fight against climate change through capital investments based on sound environmental principles. Simultaneously, other types of fixed-income securities — such as social, sustainability, and SDG bonds — emerged to offer redress for other global challenges outlined by the Sustainable Development Goals (SDGs). The devastating socio-economic consequences of the COVID-19 pandemic, and the resultant need for fiscal spending, have only increased interest in these instruments, including in countries in special situations. Issuing a thematic bond is a multifaceted process, involving numerous steps issuers are required to follow.
This report describes the major processes involved in the issuance of thematic bonds, which can be categorized into four stages: (i) feasibility; (ii) pre-issuance; (iii) issuance; and (iv) postissuance. It provides practical guidelines for engaging in each stage of the process and explains critical actions that need to be undertaken in the issuance procedures, as well as outlines the unique dimensions and benefits that thematic bonds offer.