Aeroporti di Roma and Heathrow have both issued benchmark Sustainability-Linked Bonds (SLBs). This year nearly 4% of total SLB issuance has been from the airport sector, with issuance growth in the airport sector outpacing the broader market; a positive sign of increased transparency and commitment to sustainability objectives.
We assess whether these SLBs have been effective at raising capital for transition. We also analyse the sustainability impacts for investors, and compare the recent structures and sustainability commitments from different airports.
We find that the issuance from Heathrow in particular was an ambitious structure, covering not only the airports ‘on-the-ground’ emissions but also ‘in-the-air’ emissions. Despite this, pricing shows that demand for the bond was weak. Investors calling for and rewarding more ambitious structures would incentivise issuers to make such commitments.