Asean green bond issuance doubles to US$7.8b in 2019

THE volume of green bonds and loans issued in Asean almost doubled between 2018 and 2019, in tandem with global trends, according to a report by Climate Bonds Initiative (CBI) on Thursday.

Asean issuance grew to US$7.8 billion in 2019, up from US$4.1 billion in 2018, thanks to new regulations and guidelines, the initiative, which is supported by HSBC, said in its Asean Green Finance State of the Market 2019 report.

Globally, green bond and loan issuance surged by over 50 per cent over the same period, from US$171 billion in 2018 to US$258 billion in 2019, CBI said.

Within Asean, Singapore is regarded as a regional leader in this respect, as it ccontributed to 55 per cent of the Asean green debt issuance in 2019, up from 29 per cent the previous year.

CBI noted that Asean issuers continue to favour the US dollar for their green bond issuance, but 41 per cent are issued in the local Asean currencies. This means the regional markets offer attractive investment opportunities for domestic investors and foreign funds looking to invest in local currencies, it said.

Two-thirds of the proceeds are allocated to the Buildings and Energy sectors. Green buildings topped the use of proceeds at 34 per cent, followed by renewable energy at 33 per cent, transport at 12 per cent, water at 8 per cent, and waste at 5 per cent. Land use and minor sectors comprise the remainder.

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There were at least four transactions in 2019 that CBI deemed significant.

This includes the first perpetual green bond in Asean, worth US$400 million, issued by AC Energy, a subsidiary of the Ayala Group in the Philippines. Listed on the Singapore Exchange, the proceeds will go towards solar, wind and geothermal projects.

BTS Group in Thailand issued the first green bond under Thai Securities and Exchange Commission green bond notification. It also received a subsidy for the listing fees in return.

Telekosang Hydro One in Malaysia issued the first mini hydro sukuk.

Meanwhile, Bank of the Philippines Islands raised 100 million Swiss francs in the Swiss markets at a coupon of 0 per cent and a yield of -0.02 per cent, the first negative-yielding green bond in the region.

The development of Asean's green bond market is helped by regional initiatives. Apart from supporting measures from national governments, CBI noted that the Asian Development Bank introduced the technical assistance programme in March this year to create the national ecosystems for green local currency bonds for infrastructure development in Asean, China, Japan and South Korea.