SE-Asia ESG bond proceeds rose 37.4% year-on-year in Q4 2022

PROCEEDS from South-east Asian environmental, social and governance (ESG) bonds rose 37.4 per cent year-on-year to US$2.9 billion in the last three months of 2022, bucking a global decline, according to data from Refinitiv.

Worldwide ESG bond proceeds fell 52.9 per cent to US$133.3 billion in Q4 2022, compared to the US$203.8 billion in the same quarter in 2021. For the Asia ex-Japan region, ESG bond proceeds declined 16.8 per cent to US$29 billion from US$33.8 billion over the same period.

For the whole of 2022, South-east Asia ESG bond proceeds grew 38 per cent to US$21.9 billion. Global ESG bond proceeds shrank 26 per cent to US$707.1 billion.

While green bonds are usually the most popular type of ESG bond among issuers, sustainability bonds saw the most amount raised in the fourth quarter in South-east Asian markets at US$1.8 billion.

As for ESG loans, Asia ex-Japan and South-east Asian markets also did better than global markets. While global loans declined 40.3 per cent to US$154.9 billion from US$217.4 billion, Asia ex-Japan increased 22 per cent to US$36.3 billion from US$28.2 billion over the same time period. South-east Asian borrowers obtained US$5.9 billion of ESG loans in the final quarter of 2022, a 4.1 per cent increase from the US$5.7 billion borrowed a year earlier.

Overall, Issuance volumes of ESG bonds and loans suffered in 2022 as a result of wider macroeconomic uncertainty, as rising interest rates and global recessionary concerns increased financing costs. Some market watchers are hopeful for a recovery in 2023 as interest rates stabilise and inflation subsides.