The COVID-19 pandemic has taken a terrible human toll, disrupted the global economy, and clouded the outlook with uncertainty. Its impact is widespread, and it has affected both the nature and volume of sustainable investing in surprising ways, as private capital finds new opportunities to make a positive impact on the environment and society.
Despite the turbulence in financial markets, Asia Pacific issuance of Green Social and Sustainability bonds (GSS) has held up in 2020. Green bonds might not be enjoying the rapid growth in issuance that they have enjoyed in recent years, with a small year-to-date decline on 2019. Social and Sustainability bonds however are having a strong year, accounting for around 60 per cent of total issuance in Asia Pacific, compared with 20 per cent last year1.
From an Asia perspective, there are signs that the region’s local currency markets are gaining momentum, as the renminbi and the yen are top two issuance currencies for GSS debt after the euro and US dollar. In terms of tenor, regional issuance remains relatively short, with GSS bonds mostly with a three year or three to five-year tenor.
“All of this points to a positive picture for the GSS market in Asia,” said Luying Gan, Head of Sustainable Bonds, Debt Capital Markets, Asia-Pacific, HSBC, who was speaking as a speaker for a webinar that was part of HSBC’s 2020 Credit Conference. “We believe that it is because investors and issuers are incorporating ESH into both their funding strategy and their investment strategy.