Drawing on AFII’s model portfolios, tracked using our Co₂liseum platform, and its proprietary Quantitative Transition Assessment (QTA), the note shows how historically tight spreads, supportive rate expectations, and surging AI-related capex created favourable conditions for both conventional and transition-aligned credits.
In H2, total bond issuance rose sharply across both USD and EUR markets. Green, Sustainable and Sustainability-linked (GSS) issuance recovered after a weak first half. Utilities continued to dominate GSS supply as data centre-driven electricity demand accelerated, while Technology sector issuance surged more broadly.
In secondary markets, dispersion remained low, challenging active strategies but supporting passive portfolios. Energy sector curves proved unexpectedly resilient despite weak and volatile oil prices, while renewable energy credits staged a revival in H2 after a volatile start to the year.
We conclude with research showing clear evidence that transition leaders’ issuances are outperforming. Bonds issued by companies with stronger QTA scores delivered better returns with lower volatility, reinforcing the case for transition alignment as a financially material investment factor.
