In the past few years, the fixed income markets have seen a substantial rise in green, social, sustainability, and Sustainable Development Goal (SDG) bonds. These bonds, referred to collectively as thematic bonds, are akin to common fixed-income securities. The main difference is that the projects financed from the issuance of such bonds aim to generate high environmental and social benefits. Thus, thematic bonds can contribute to implementing the 2030 Agenda for Sustainable Development.
The signing of the Paris Agreement in 2015 contributed to the emergence of green bonds. The Agreement brought the urgent need for global institutional investors to fight against climate change through capital investments based on sound environmental principles. Simultaneously, other types of fixed-income securities —social and sustainability bonds — emerged to offer solutions for other global challenges outlined by the SDGs. The socioeconomic 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 must follow.
This report aims to introduce the issuance of thematic bonds by describing the steps required by issuers. It illustrates 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) post-issuance. The report provides practical guidelines for engaging in each stage of the process, explains critical actions that need to be undertaken in the issuance procedures, and outlines the unique dimensions and benefits that thematic bonds offer.