Morgan Stanley Warns of ESG Bond Fallout Amid New Guidelines (1)

A new set of ESG debt guidelines is likely draw a line in the market for sustainability-linked bonds, as investors are offered clear metrics to determine which products to buy and which to avoid, according to analysts at Morgan Stanley.

SLBs, which tie a bond’s coupon to an issuer’s performance on sustainability targets, have faced a barrage of criticism amid concerns that the metrics set are often too weak. Regulators have yet to enforce strict parameters for the SLB market, but the industry itself is now stepping in. On Tuesday, the International Capital Market Association published updated guidance for SLBs. ...