Attaching a social label to a bond is expensive and, for now, not really something most issuers can justify, according to the head of sustainable finance at SEB AB, the bank that pioneeredgreen bonds more than a decade ago.“Putting in a social filter costs money, my team costs money,” SEB’s Christopher Flensborg said in an interview. “An independent Verifier costs money as well.”The Stockholm-based investment banker says one of the few areas to so far warrant the extra cost is social-housing bonds. To be “relevant for finance,” the additional fees tied to issuanceneed to be covered by the long-term economic gains the underlying project represents, he said. And social housing checks that box, he said.Despite the initial hurdles that the relatively new field of debt finance represents, Flensborg expects the market for social bonds to take off amid intense investor demand for sustainableassets. SEB estimates a record $334 billion in social bond sales this year, more than double the amount sold in 2020.
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