The evolution of bond issuances by local authorities between 2015 and 2021

Emerging in the 2010s, the share of bond loans in the financing of local authorities' budgets has seen significant growth in recent years. With only a few major issuing regions a decade ago, the local authorities market has opened up to cities and urban communities that have become regular issuers. For the smaller authorities that cannot independently access the capital markets, they have preferred to band together to gain access to this asset class.

Several factors explain this growing appeal among public issuers. First, the average interest rate reached a low point in 2020 (0.33% compared to 1.33% in 2015). Additionally, a more mature ecosystem has developed around this type of financing: a simplification of the applicable regulations (prospectus) and legal and financial support from specialists.

Between 2015 and 2021, the standard profile of an issuance was as follows:

• Type of issuer: Region
• Amount: €10M to €20M
• Fixed coupon
• Maturity: 10 or 20 years
• Rating: between AA- and AA (long-term S&P rating)

It is important to note that four major issuers alone account for more than 50% of the amounts issued.

Finally, the trend is towards green! Green and socially responsible bond issuances are a rapidly growing financing tool, particularly for large authorities such as regions. These green bonds indeed finance projects in the fields of public transport or the energy renovation of public buildings.

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