Asian ESG Bond Issuance Hit Unabated $ 69 Billion This Year | The powerful 790 KFGO
By Scott Murdoch
HONG KONG (Reuters) – Borrowers in the Asia-Pacific region more than doubled the issuance of bonds linked to environmental, social and governance (ESG) themes to a record $ 69 billion this year, according to data, as they sought to strengthen their sustainability credentials and leverage red. strong demand from investors.
Bankers say the trend will continue, increasing their commission income. Some of the world’s largest investment banks are strengthening their teams to deal with the increase in ESG bond transactions.
ESG-related issuances from companies, government agencies and other institutions in Asia-Pacific (excluding Japan) this year exceeded those from US issuers for the first time in two years.
Asia-Pacific entities are accelerating their ESG plans, taking advantage of abundant liquidity and growing demand from global investors keen to increase their exposure to the region as economies recover from the impact of the COVID pandemic. 19 with the increasing deployment of vaccines.
Refinitiv data showed that of the $ 69.1 billion in ESG bonds issued in Asia-Pacific so far this year, green bonds were the most common, accounting for 70% of transactions and ahead of bonds linked to the sustainable development, which accounted for 20%.
Chinese entities issued 51.3% of ESG bonds in the region, ahead of South Korea which represented 21.2%.
“The demand for green deposits, loans and access to capital markets is at record levels compared to previous years and is growing,” said Kaleem Rizvi, head of corporate banking services at Citigroup in Asia. Peaceful.
“More and more clients are realizing that they need a clear ESG strategy. Investors and other stakeholders demand it and they don’t want to be left behind.
So far in 2021, Citi has been involved in nearly $ 25 billion in Asia-Pacific ESG finance deals, six times more than a year ago, including a green bond from the Hong Kong government $ 2.5 billion.
The Development Bank of China raised $ 3 billion in green bonds in March and the Asian Infrastructure Investment Bank struck a $ 2.9 billion deal in January, the data showed.
Climate change and other environmental issues are high on the agenda of most Asian governments, and financial regulators, such as in Hong Kong and Singapore, have also started changing the rules to require companies to better disclose their environmental impact. .
Hong Kong announced in December that financial institutions and listed companies will have to disclose the financial impact of climate change on their businesses, as set out in a major global standard, by 2025.
RISK OF ‘GREENWASHING’
There have been 234 ESG bond issues in Asia-Pacific this year, almost triple the same period last year, according to data from Refinitiv.
In the United States, there were only 86 deals, which raised $ 53.1 billion. In Europe, the traditional leader of the ESG market, 248.1 billion dollars of ESG bonds were issued in 2021, at least three times more than in the same period last year.
One risk for investors in ESG bonds in China and other Asia-Pacific markets is “greenwashing”, or issuers exaggerating their environmental credentials, which has led some bond buyers to be cautious.
“Investors have a growing appetite right now, but there is also an increasingly demanding approach to investing; they don’t want to get burnt by a greenwashing label, ”said Kamran Khan, Deutsche Bank’s ESG manager for Asia-Pacific.
“They have a lot of capital, they want to invest it in ESG transactions, but they want it to be of very high quality with a proven impact.”
(Reporting by Scott Murdoch in Hong Kong; Editing by Anshuman Daga and Muralikumar Anantharaman)