Issuance of ESG-labelled bonds – green, social, sustainability and sustainability-linked – surged to a record high in Asia in 2021, underpinned by higher demand for investments to address climate change and various social issues, such as employment generation and support for small and medium-scale enterprises. Outside of Japan and Australasia, the total volume surged to US$82.50 billion, according to Refinitiv, a London Stock Exchange Group business, or more than double the 2020 amount of US$40.28 billion.
The broadening of the environmental, social and governance (ESG) debt market was underpinned by issuers embracing sustainable financing across the region. One such impressive issuer in 2021 was the Hong Kong Special Administrative Region (HKSAR), which ramped up its green bond offerings during the year. It accessed the market in three occasions raising close to US$6.30 billion equivalent in multiple currencies.
Selected as the government issuer of the year in The Asset Triple A Sustainable Capital Markets Awards 2021, HKSAR first tapped the market in January with a three-tranche green bond issuance totalling US$2.5 billion, achieving tight pricing across all tranches and extending its yield curve as it priced its longest bond tenor ever at 30 years. This was the first-ever 30-year green bond trade by an Asian government.
It returned to the green bond market in November with a dual-currency transaction amounting to US$3 billion equivalent, including its inaugural offering in the euro bond market. About a week later, HKSAR further built its green bond portfolio with a two-tranche five billion yuan (US$788.65 million) deal – setting an important new benchmark for the offshore renminbi bond market.
Voted as the quasi-sovereign issuer of the year is the Korea Housing Finance Corporation (KHFC), a government-controlled entity tasked with providing a stable source of housing finance. It became a regular issuer in the euro covered bond market since it accessed this pool of liquidity in 2018. It further demonstrated its commitment to this market in 2021 when it printed two social covered bonds totalling €1.55 billion (US$1.76 billion). The first deal was priced in June amounting to €1 billion for five years, which achieved the lowest spread ever for a euro public transaction by a Korean issuer at that point in time.
Following the successful transaction, KHFC returned to the market in October with a €550 million issuance, which extended the company’s euro credit curve with a seven-year tenor. The proceeds from the social covered bond deals were earmarked to facilitate access to housing finance for low and middle-income earners in Korea through a diverse range of mortgage loan products as detailed in KHFC’s social financing framework.
GLP, a leading global investment manager and business builder in logistics, real estate, infrastructure, finance and related technologies, wins the award as the corporate issuer of the year. In February 2021, it closed its first sustainability-linked loan amounting to US$658 million – demonstrating its commitment to sustainability. The company used the proceeds to contribute to environmental objectives related to climate change mitigation and the promotion of green buildings.
After an absence of more than five years, GLP returned to the international public US dollar bond market in May as it priced a US$850 million green subordinated perpetual non-call five-year securities. Upsized from the initial target amount of US$500 million due to strong demand, this was the first-ever offering of US dollar green subordinated perpetual securities by an Asia-Pacific corporate with the proceeds earmarked to refinance green projects in accordance with the company’s green finance framework.
Bank of China (BoC) is once again chosen as the financial institution issuer of the year as it continued to be at the forefront in the issuance of various ESG-labelled bonds in 2021 through its different global branches. In the first deal of its kind globally, BoC (London) printed in October the inaugural sustainability re-linked bond (SRLB), which introduced broader investor base to the sustainability-linked loan market linking financial resources between the global bond market and the loan market.
In September, BoC (Macau) and BoC (Sydney) priced on the same day a one billion yuan biodiversity-themed green bond and a US$300 million green bond. The CNH tranche represented the first biodiversity-themed green bond from an Asian issuer and a financial institution globally.
Earlier in January, BoC (Hong Kong) priced a dual-currency transition bond consisting of 1.8 billion yuan for two years and US$500 million for three years. Then in April, it printed a four-tranche offering, three of which were green bonds, again through different branches. The Macau branch priced a conventional bond amounting to one billion yuan for five years, while the Singapore branch launched a US$500 million green bond for three years. The Luxembourg branch arranged a dual-currency green bond amounting to US$500 million for five years and €500 million for three years.
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