Santander Corporate & Investment | December issuance barely reached €2.6 Bn but closed the year with 2021 issuance growing 74% YoY to €394 Bn. Green emissions in 2021 doubled compared to 2020 (€203 Bn vs €97 Bn in 2020) and dominated the European ESG primary, with a 52% share. Social emissions closed virtually flat (€104 Bn vs €98 Bn in 2020) and lost ground (their share has fallen to 26% vs 45% in 2020) in favor of sustainable emissions, which have almost tripled (€87 Bn vs €31 Bn in 2020) and their share has grown to 22% from 12% in 2020. We expect this trend to continue in 2022, as pandemic-related emissions decline and the preference for sustainable bonds grows. By issuer type, Sovereigns, supranationals and agencies (SSAs) led issuance in 2021, with €213 Bn vs. €115 Bn of corporate issuance and €66 Bn of financials.
ESG issuance doubled its share of the European primary to 26% but investor demand continues unabated. 26% of European corporate issues last year were ESG (vs. 9% in 2020 and 6% in 2019), rising to 70% in the Utility&Energy sector. For financial issues, the share of ESG issues increased to 18% vs. 10% in 2020 and 7% in 2019. Moreover, ESG debt achieved higher oversubscription ratios in primary: 3.6x on average for ESG corporate issues in EUR vs. 3x for their non-ESG counterparts, and 2.6x on average for ESG financial issues vs. 2.4x for non-ESG types. In addition, issue premiums for 2021 ESG issues were significantly lower than their non-ESG counterparts, especially for corporate issues: by 1.8bp on average vs. +5.3bp for non-ESG.
Strong investor appetite in line with the significant inflow of money into European ESG funds, much higher than that of non-ESG funds. Thus, in the fixed-income world, ESG funds have received a net inflow of +$43 Bn in 2021, more than double the +$19 Bn of non-ESG funds, while in the equity world, the net inflow of +$32.6 Bn of ESG funds contrasts with the outflow of -$29 Bn of non-ESG funds.