Record-Breaking €240 Billion Worth of European Bond Sales Secured in Historically Active January
Record European Bond Sales in January 2023: A Boost for Sustainable Finance
European bond markets experienced a surge in activity during January 2023, with record sales reaching €244 billion. The week of January 13 was particularly noteworthy, marking the busiest ever for debt handling in the area with over €100 billion increased in just five days.
The highlight of the month was France's issuance of a record €8 billion green OAT (Obligation Assimilable du Trésor) 3.00% due June 2049. This was the largest green bond ever issued for that category, with a yield at issue of 3.201%. This move underscores the growing role of ESG (Environmental, Social, Governance) factors in government debt issuance.
The increased activity in European government bond markets was driven by several factors. Robust demand for green bonds, increased issuance activity by European governments, and the broader market's interest in sustainable and catastrophe-linked bonds all contributed to the surge.
European governments continued strong bond issuance throughout 2023 and beyond, reflecting financing needs and an ongoing push toward ESG and green finance. By the first quarter of 2025, EU member states and the UK issued over €1 trillion in bonds, including significant volumes of green bonds from Italy, Austria, and Hungary.
The trend towards catastrophe bonds (cat bonds) also reached record sales of $18.1 billion in 2025, reflecting insurers transferring climate-driven disaster risk to investors amid rising losses from extreme weather. This trend overlaps with green bond markets as investors seek returns with sustainability impact.
The increased issuance of catastrophe bonds and green bonds affects corporate financing by promoting risk transfer mechanisms and incentivizing investments in climate resilience and sustainability projects. European businesses, especially those aligned with sustainability objectives, benefit from enhanced funding availability at competitive yields due to strong demand for green and ESG bonds.
The rally in the worldwide credit market is reducing funding expenses for issuers. A EUR5 billion offering from the European Union has gathered almost EUR52 billion of orders, while a UK gilt sale of £6 billion has gathered over £65 billion of orders. This indicates that consumers are actively participating in public debt markets during the start-of-year global credit rally.
The turnaround from a disappointing 2022 for international credit markets is significant. Central banks' initiatives to combat surging inflation had buffeted issuance tasks and sometimes closed the door to any debt sales whatsoever. However, providers are becoming more mindful of the need to issue bonds when there's a window of opportunity rather than waiting.
David Zahn, head of European fixed income at Franklin Templeton, stated that providers are becoming more mindful of the need to issue bonds when there's a window of opportunity rather than waiting. Franklin Templeton is overweight on European credit, indicating a positive outlook for the market.
The issuance of digital bonds by major institutions like the European Investment Bank starting in January 2023 illustrates fintech-enabled innovation in bond markets, facilitating broader access and efficiency for businesses and investors.
In sum, January 2023's record European bond sales, exemplified by France’s €8 billion green bond issuance, were a result of heightened investor interest in sustainable finance and risk-linked instruments, supporting governments’ funding needs and offering businesses expanded financing channels aligned with environmental and social objectives.
Investors demonstrated a growing interest in sustainable finance by investing heavily in green bonds, leading to record European bond sales in January 2023. This surge in activity was fueled by increased issuance from European governments and robust demand for sustainable and catastrophe-linked bonds.
Businesses, particularly those attuned to sustainability objectives, benefit from this trend due to improved financing options and competitive yields, thanks to high demand for green and ESG bonds.
