The ECB plans to shrink its €5tn bond portfolio by about €300bn, while eurozone governments are expected to increase the amount of debt they issue from €1.1tn this year to about €1.3tn next year. Increased debt issuance, coupled with less bond buying from the central bank, could revive concerns over a repeat of the region’s 2012 sovereign debt crisis.

Europe’s markets watchdog ESMA has proposed new standards for ESG labelling. Many funds have already been downgraded from Article 9, EU’s top ESG class, to Article 8, after the EU clarified its rules. But only 18% of Article 8 funds, which hold about $4 trillion of asset, meet the new standards and managers won't be able to label them sustainable.

EU ministers have backed a carve-out for banks and investment funds from a landmark regulation. The corporate sustainability due diligence directive requires companies with more than 500 employees or €150mn global turnover to identify and prevent activities such as child labour, worker exploitation or damage to natural ecosystems in their supply chains.

The European Investment Bank launched Project Venus and issued a €100 million digital bond. Central banks of France and Luxembourg provided a digital representation of the euro in a form of tokens. Société Générale and Goldman Sachs acted as on-chain custodians. The bond will be listed on the Luxembourg Stock Exchange.

It is a $2 billion unregulated global market. A major reseller of carbon offsets, EKI went from $10 M to $1 B valuation in a year. 95% of the offsets it sells are tied to wind and solar projects, which are profitable even without them. Many “offset-verifying” companies have stopped approving such offsets, but new companies that “verify” them sprung up.

The EU is trying to de-link gas prices from that of electricity and rethink the use of the Netherlands’ Title Transfer Facility price, which is based on pipeline supplies, as the continental benchmark for gas. Other European indexes such as Iberia’s Mibgas, which doesn’t take into account import prices, have experienced a lesser impact.

UK’s DB schemes collectively have £1.5tn assets under management. They will invest more in liquid markets like bonds and gilts. Conversations with investors are around high inflation, more volatility and rising interest rates. Instead of thinking in terms of equities and fixed income, investors are thinking about “risk factors” that cut across asset classes.

HSBC announced plans to launch Orion, its DLT platform for issuing bonds. It enables the tokenisation of both the digital bond and the currency used for settlement, enabling atomic settlement or delivery versus payment (DvP). Tokenisation opens up opportunities for fixed-income issuance, including faster processing and improved operational performance.

Britain’s wind farms produced a record amount of electricity, cutting demand for natural gas just as the temperatures start to drop. The UK’s fleet of wind farms generated more than 20 GW on Wednesday, according to National Grid Plc. In the coming years, the UK government aims to expand its offshore wind capacity to as much as 50 GW by 2030.

The price investors pay to borrow cash overnight by pledging gilts is trading 43 basis points below the BOE’s rate. Low repo rates are due to pension funds hoarding cash and years of quantitative-easing have limited the pool of safe government securities freely available to trade. Demand for high-quality liquid assets still outstrips supply.

Issuances of green and other sustainable bonds have fallen in 2022. Year-to-date volumes of $679 billion were down 17%, outperforming the broader bond market, which declined by 27%. Challenging macroeconomic environment pressures global debt issuance. Corporate volumes account for the bulk of the decline this year with other sectors remaining stable.

Perpetual bonds are the ideal tool to resolve a financial crisis. Not having to repay the principal is a tremendous advantage. Now the interest rate would be high, but after a “non-call” period, bonds can be redeemed and replaced with bonds with a lower coupon. This would address a difficulty pension funds have faced — the illiquidity of long-term gilts.