Leading European asset manager Amundi announced today the launch of its first Social Bond Strategy, identifying the recent explosive growth in social bond issuances as the beginning of the market’s trajectory, following in the footsteps of the green bond market.
2020 has been a breakout year for the social bond category of the sustainable finance market, driven in part from pandemic-related issuances. A significant portion of social bond issuances have come from sovereign sources, including the European Commissions launch of its EU SURE bonds program in October, issuing €17 billion of new social bonds, with proceeds aimed to help protect jobs and keep people in work. Investment information service and rating company Moody’s has raised its 2020 forecast for social bond issuance from $25 billion at the start of the year to $100 billion.
Amundi’s new social bond strategy will mostly be invested in social bonds aligned with the International Capital Markets Association’s Social Bond Principles (SBP) whose proceeds will be used for projects compliant with the SBP Project Categories. Amundi also stated that it will look to expand the strategy’s investment universe by including regular bonds issued by sovereigns and corporates thoroughly selected for their strong social practices, as well as innovative instruments such as sustainability-linked bonds with social targets.
Amundi stated that it is committed to supporting the development of this new segment of sustainable fixed income, after having supported the expansion of green bonds in emerging markets and beyond pure investment grade instruments. While most social bond issuers are currently sovereign, supranational and agencies (SSAs), mirroring the early days of the green bond market, Amundi is aiming to foster the development and diversification of the market in years to come, investing in a variety of issuers in different sectors, and benefiting from the trend of the social bond market diversifying away from the current European concentration.
Eric Brard, Head of Fixed Income at Amundi, said:
“In the context of the current economic and health crisis, we believe that investors are increasingly looking for innovative solutions that can generate positive outcomes for society as a whole. As the fastest-growing segment of the sustainable fixed income market in 2020, Social Bonds are emerging as an appropriate financial instrument seeking to capture opportunities of financing projects with a social agenda without giving up on returns.”
Amundi stated that Isabelle Vic-Philippe, Head of Euro Aggregate, will be the Lead Portfolio Manager for the new strategy, with Alban de Faÿ, Head of Fixed Income Socially Responsible Investing (SRI) Process, and Dany da Fonseca, Fixed Income Euro Investment Grade (IG) Credit, as Co-Portfolio Managers, and supported by the firm’s 23 strong team of ESG experts.