Slovenia publishes SLB framework
Slovenia's entry to the sovereign sustainability-linked bond market is imminent and banks are arranging fixed-income investor meetings for early April.
Slovenia will be the first European sovereign to tap the SLB market and Barclays and BNP Paribas are organising meetings starting on April 2 that will focus on its new framework.
The country said it is advancing its sustainable finance journey with the new framework for SLBs, which "represent a more performance-oriented approach to integrating sustainability into its financing instruments".
Slovenia's entry into the SLB market has been well flagged and could lead to issuance from a wave of potential countries ahead of the UN-sponsored COP30 meeting in Belem, Brazil, in November as more countries outline efforts to reduce emissions and publish nationally determined contributions under the Paris Agreement on climate change.
A sovereign SLB could also revitalise the flagging KPI-based instrument and more sovereigns are showing interest. South Africa has appointed structuring advisers on a framework for SLB entry and other candidates include an emerging market quartet of Barbados, Kenya, Rwanda and Ukraine, as well as the Netherlands.
Only 17 SLBs totalling US$7.3bn have been printed so far in 2025 compared with 22 SLBs totalling US$9.4bn last year, according to LSEG data.
Still, sustainability-linked bonds can be extremely useful for sovereigns as they anchor commitments across government cycles and help provide long-term certainty to companies and investors while supporting sustainability ambitions.
Thailand issued an SLB in November becoming the first sovereign to issue an SLB outside Latin America after Chile and Uruguay pioneered the product in 2022.
A3/AA–/A rated Slovenia's SLB framework has three KPIs that include total annual greenhouse gas emissions, the share of renewable energy consumed and energy efficiency. All KPIs are rated "advanced" by S&P, which provided the second-party opinion.
Established issuer
Slovenia is an established issuer of sustainable bonds with green and social use of proceeds. It entered the market in June 2021 with a €1bn benchmark and returned in January 2023 for €1.25bn after updating its framework. In September 2024, the country made entered the Samurai market with a dual-tranche ¥50bn (US$332m) social Samurai bond.
The SLB framework signals Slovenia's determination to integrate its financial mechanisms with environmental objectives as it moves towards climate neutrality.
Its main focus is decarbonisation, with a net-zero commitment by 2050 outlined in the Slovenian Climate Strategy 2050 and the Environmental Protection Act. The Climate Act, currently being drafted, targets reaching climate neutrality by 2045, five years earlier than the official commitment. The National Energy and Climate Plan 2024 also outlines measures to achieve EU and international climate commitments.
Due to its geography, Slovenia says that it is warming at a faster rate than the global average and is vulnerable to the consequences of climate change, particularly the frequency of extreme weather events.
S&P said that it viewed "physical climate risk as a key threat for Slovenia", particularly in terms of heat waves, forest fires, floods, and droughts. In August 2023, severe flooding cost around €10bn, or 15% of GDP.
For 2025–28, Slovenia is planning to allocate around 5.5% of GDP to public investment projects that focus on green transition, including transport (railways), environmental infrastructure, health, long-term care, housing, education, sports and culture.
It views maximising private investment as "crucial" as investments planned for 2021–30 amount to €57bn.
The funding gap will be covered by prioritising EU funds, financial instruments and the central budget. The financing model will coordinate public grants, loans and resources from financial institutions and funds, according to the framework.