Asian green bonds: more catching up needed

Asia’s green financing market has made great strides since issuance started to pick up two years ago, with 2017 seeing more regulators and issuers giving the asset class a push. But for all its impressive feats, the region’s green market is yet to come of age.

  • By Addison Gong
  • 12 Dec 2017
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There’s no question the Asian green debt market has gone from strength to strength — not just in terms of volumes of G3 green bond issuance but also diversity, because while China and India have continued to lead the way, 2017 offered up more to the market.

Singaporean issuers were active for the first time, both in the local currency as well as US dollars. CDL Properties became the first name from the city-state to opt for the green format, raising S$100m from a 1.98% 2019. Three months later, DBS Group Holdings pioneered with Singapore’s inaugural international green bond, printing inside the curves of its global peers.

Investors have also been spoilt for choice when it comes to currency. Green bonds have been sold in Australian dollars, Hong Kong dollars, Japanese yen, Malaysia ringgit, Singapore dollars and Turkish lira this year by Asian borrowers — in addition to the previously seen renminbi, Indian rupee, euro and US dollar deals.

Regulators too have stepped up their game in encouraging more issuance. For example, the Reserve Bank of India is coming up with green bond guidelines and a framework, while the Securities and Exchange Board of India put in place disclosure requirements in June for the issuance and listing of green debt. Sebi had issued green bond guidelines in January 2016.

The Indian Green Bonds Market Development Council, a public-private initiative formed late last year, launched its 2017 programme, while in Singapore, the monetary authority announced a grant scheme in March to boost green issuance.

While these are all good signs, they are not nearly enough. True, international accounts have been supportive when it comes to Asian green bonds, allowing the likes of China Development Bank to allocate close to half of its maiden green trade to investors in Europe.

But what Asia is still lacking is support from home grown, green-dedicated funds, which have a buy-and-hold nature and are less sensitive about pricing.

International Finance Corp and Amundi’s $2bn Green Cornerstone Bond Fund created in April — to buy green bonds issued by emerging market banks — was undoubtedly a landmark. In addition, deals such as the medium term notes sold by Hong Kong’s MTR Corp and Hong Kong and China Gas Company saw Asian investors come in, but the overall development of green dedicated funds in Asia has been slow.

The lack of strong green buy-side backing saw investors going into issuance from Rural Electrification Corp and Modern Land (China) Co, but not for their green features. Meanwhile, Concord New Energy Group, the first non-financial issuer of bonds in China’s domestic green market in April 2016, was forced to postpone its green dollar debut last month when investors failed to support it in a down market.

Also, there is no clear pricing advantage for Asian issuers to go down the green route — in part due to the absence of home-grown green funds.

Perhaps more importantly, Asia hasn’t truly taken off because many in the region still view green as something nice-to-have, instead of a must have.

Green is not a natural funding choice for many issuers, and in some cases is a last minute tack-on label to transactions. Issuance is also sometimes a public relations exercise, a marketing trick, or even part of a political agenda, while the problem of green-washing deals continues to prevail in the region.

What is all the more concerning is that the challenges today are largely similar to the obstacles facing the asset class a year ago. Green issuance may have grown, but the level of the market’s development hasn’t — and that is a problem. 


  • By Addison Gong
  • 12 Dec 2017

Panda Bonds Top Arrangers

Rank Arranger Share % by Volume
1 China Merchants Securities Co 20.87
2 Industrial and Commercial Bank of China (ICBC) 14.74
3 CITIC Securities 12.47
4 Agricultural Bank of China (ABC) 11.34
5 China CITIC Bank Corp 10.21

Bookrunners of Asia-Pac (ex-Japan) ECM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Goldman Sachs 12,347.28 50 8.23%
2 Citi 10,940.93 60 7.29%
3 Morgan Stanley 9,919.63 37 6.61%
4 China International Capital Corp Ltd 8,032.87 28 5.36%
5 China Securities Co Ltd 7,436.55 29 4.96%

Bookrunners of Asia Pacific (ex-Japan) G3 DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 15,555.62 124 7.35%
2 Citi 14,596.34 92 6.90%
3 JPMorgan 10,469.33 53 4.95%
4 Bank of America Merrill Lynch 10,014.06 57 4.73%
5 Goldman Sachs 9,025.15 40 4.26%

Asian polls & awards

  • GlobalCapital opens Green/SRI Bond and Loan Awards Poll 2018

    After a year of burgeoning growth and change in green, social and sustainability bond issuance, with huge acceleration in green loans, GlobalCapital today invites you to vote in its third Awards poll for this market.

  • The Australian Fixed Income Poll 2018

    Asiamoney, in association with National Australia Bank, invites all fixed income investors in Asia and Europe to participate in the Australian Fixed Income Poll 2018. The online poll will take only five to 10 minutes to complete.

  • Regional Capital Markets Awards Part IV: Investment Bank

    In the last instalment of our 2017 awards, we present the full write-ups of the winners of Best Asian Investment Bank and Best Investment Bank.

  • Regional Capital Markets Awards Part III: Bonds

    In the third instalment of our 2017 awards, we present the full write-ups of the winners of the Best Local Currency Bond, Best High Yield Bond, Best Financial Bond, Best SSA Bond, Best Investment Grade Bond, Best Project Finance Deal, Best Bond, Best G3 and Local Currency Bond House, and Best High Yield Bond House.

  • Regional Capital Markets Awards Part II: Equities

    In the second instalment of our 2017 awards, we present the full write-ups of the winners for Best Follow-On/Accelerated Bookbuild, Best Equity-Linked Deal, Best IPO, Best ECM Deal and Best ECM House.