Asia’s ESG bond issuances hit file $69 billion this yr, no let-up seen By Reuters
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By Scott Murdoch
HONG KONG (Reuters) – Asia-Pacific debtors greater than doubled issuance of bonds tied to environmental, social and governance (ESG) themes to a file $69 billion this yr, knowledge confirmed, as they sought to burnish their sustainability credentials and faucet red-hot investor demand.
Bankers say the pattern will proceed, boosting their payment incomes. A number of the largest international funding banks are bulking up their groups to deal with the elevated ESG-related bond offers.
ESG-related issuances from firms, authorities our bodies and different establishments in Asia-Pacific (excluding Japan) this yr have outpaced these by U.S. issuers for the primary time in two years.
Asia-Pacific entities are fast-tracking their ESG plans, making the most of plentiful liquidity and hovering demand from international buyers who’re eager to extend their publicity to the area as economies get better from the affect of the COVID-19 pandemic with the rising rollout of vaccinations.
Knowledge from Refinitiv confirmed that of the $69.1 billion in ESG bonds issued in Asia-Pacific up to now this yr, inexperienced bonds have been the commonest, accounting for 70% of the offers and forward of sustainability-linked bonds, which made up 20%.
Chinese language entities issued 51.3% of the ESG bonds within the area, forward of South Korea which accounted for 21.2%.
“Demand for inexperienced deposits, loans and entry to capital markets is working at file ranges versus prior years and is gathering additional momentum,” stated Kaleem Rizvi, Citigroup (NYSE:)’s head of company banking in Asia Pacific.
“Extra purchasers are realising they want a transparent ESG technique. Traders and different stakeholders are demanding it they usually do not wish to be left behind.”
Thus far in 2021, Citi has been concerned in ESG-related financing offers in Asia Pacific value almost $25 billion, six occasions greater than the year-ago interval – together with a Hong Kong authorities $2.5 billion inexperienced bond.
China Growth Financial institution raised $3 billion in a inexperienced bond in March and the Asian Infrastructure Funding Financial institution carried out a $2.9 billion deal in January, the information confirmed.
Local weather change and different inexperienced points are excessive on the agenda of most Asian governments, and monetary regulators, similar to in Hong Kong and Singapore, have additionally begun altering guidelines to drive firms to higher disclose their environmental affect.
Hong Kong introduced in December that monetary establishments and listed firms must disclose the monetary affect of local weather change on their companies, as outlined in a serious international customary, by 2025.
There have been 234 ESG-linked bond issuances in Asia- Pacific this yr, almost trebling from the identical timeframe final yr, Refinitiv knowledge confirmed.
In the US, there have solely been 86 offers, which raised $53.1 billion. In Europe, the normal ESG market chief, $248.1 billion in ESG-related bonds have been issued in 2021, not less than thrice greater than the identical time final yr.
A danger for buyers in ESG-related bonds in China and different Asia-Pacific markets is ‘greenwashing’, or issuers exaggerating their environmental credentials which has led to warning amongst some bond consumers.
“Traders have an expansive urge for food in the meanwhile however there’s additionally an more and more discerning method to investing; they do not wish to get burnt with a greenwashing label,” stated Kamran Khan, Deutsche Financial institution (DE:)’s head of ESG for Asia Pacific.
“They’ve loads of capital, they wish to make investments it in ESG transactions, however they need them to be of very top quality with substantiated affect.”
Blackstone’s co-head of hedge fund unit McCormick to leave firm By Reuters
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