Asia Pacific

New dynamics are appearing in the sustainability-linked loan market, as the product balloons and banks prepare for more intense scrutiny of their green lending activities. The trends highlight how unformed and confusing this young market still is, writes Jon Hay.

As financial markets fretted over the spread of a coronavirus outbreak in China this week, one security was in the firing line more directly than any other. Holders of the World Bank’s pandemic bond will lose principal if the disease spreads by a sufficient amount, writes Jasper Cox.

Some weird genetic mutations have been appearing in the hothouse of sustainable finance, where new green products are cultivated to beautify the grandees of the capital markets.

Lloyds Bank and National Australia Bank issued two very well received Sonia linked sterling covered bonds this week, taking advantage of demand spotted in a deal issued by Royal Bank of Canada last week.

Korean Housing Finance Corporation (KHFC) issued its first €1bn-sized covered bond and first negative yielding Asian covered bond on Wednesday. The strong reception was in keeping with two German Pfandbriefe also issued this week by Deutsche Apotheker- und Ärztebank (Dapo) and Sparkasse Pforzheim Calw.

European equity capital markets’ buoyant start to the year ground to a halt this week as banks held back from doing deals over concerns about the outbreak of a deadly strain of coronavirus in China and how it may damage investor risk appetite. Losses in Asian markets, which are reopening following the Lunar New Year holiday, have compounded fears that global risk sentiment may be turning.

Moody’s Investors Services has beefed up its coverage of environmental, social and governance (ESG) factors, naming a veteran analyst as its first global head of ESG.

Korean Housing Finance Corporation (KHFC) issued its first €1bn-sized covered bond on Wednesday and priced the deal inside fair value. At the same time, Société Générale issued a €1bn 10 year green covered bond flat to its curve with eye-catching demand.

Development Bank of Kazakhstan (DBK) is embarking on a roadshow to market a tenge-denominated Eurobond.

Indian telecommunications company ITI has launched its IPO, looking to raise up to Rp14bn ($196.6m) in fresh equity.

The UK's National Grid followed up early January’s well-received green bond debut with a pair of green bond MTNs from a subsidiary, printing in currencies it rarely visits.

German supermarket chain Lidl has raised a £515m-equivalent loan from a consortium of Chinese and Taiwanese lenders for two of its European subsidiaries, in the company’s first outing in Asian capital markets.