Despite MAS optimism, transition bonds struggling to take off

THE MONETARY Authority of Singapore (MAS) may be optimistic about the prospects for transition bonds, but industry players said there are critical taxonomy gaps and more flexible alternatives keeping the financing instrument from taking off.

MAS managing director Ravi Menon said in July that “the transition bond market has good potential to grow”, as part of remarks that highlighted the need to “to provide the funding support for companies that are not so green, to become greener”.

But transition bonds, a variant of the more common green and sustainable labeled versions, have struggled to become a meaningful source of funding for such activities. Menon himself noted that there were only 12 transition bonds issued globally in 2021, amounting to just US$4.4 billion, a fraction of the US$800 billion in total for green and sustainable bonds.