A new report from the Climate Bonds Initiative, backed by HSBC, puts the Malaysian sustainability bond and sukuk market at US$2.6 billion. The Asean Sustainable Finance State of the Market 2020 report says Malaysia and Singapore have stepped up their long-run bid to become regional centres for green and sustainable finance, which is bringing more life to sustainability bond issuance across Asean. HSBC announced the report on April 29, 2021, and Bernama carried a summary in The Star on June 18.
The region as a whole kept growing through the pandemic. Asean green, social and sustainability (GSS) issuance hit a record US$12.1 billion in 2020, up 5.2% from the US$11.5 billion issued in 2019. Since 2016 the cumulative total has reached US$29.1 billion. Singapore led, with 53 per cent of regional issuance, and Thailand and Indonesia both grew strongly.
Malaysia’s deals
Malaysian entities have issued 15 green bond, sukuk and loan deals, six of them in 2019 and three in 2020. One of the 2020 deals was the first ASEAN Green Sustainable and Responsible Investment Sukuk, worth RM260 million (US$61m). Leader Energy issued it, with HSBC Amanah Malaysia as lead arranger. The report said the money would pay for two solar photovoltaic projects in Kedah and marked Leader Energy’s first project financing in the ringgit bond market.
On policy, the report points to Malaysia’s Joint Committee on Climate Change, led by Bank Negara Malaysia and the Securities Commission Malaysia. Writing guidance papers on managing climate risk, including scenario analysis, is among its priorities for 2021. Malaysia, the report adds, “sees a future role as an international centre for sustainable Islamic finance and green sukuk.”
Across the region
Green-labelled debt, covering green bonds, loans and sukuk, still made up most issuance at US$9.3bn, up 5.6% from US$8bn in 2019. There were 40 green products in 2020, 21 bonds and 19 loans, against 32 the year before. The biggest Southeast Asian issuer was MS Commercial Pte Ltd of Singapore, with a USD1.44bn green loan. Sustainability bonds reached an all-time high of USD2.9bn across six new deals, driven by demand for health financing.
Public issuers are expected to pull private ones in. Singapore and Vietnam have announced planned sovereign green bonds. Social bonds fell 10% to USD48.7m from three deals, and the report notes that Asean’s social and sustainability bond markets remain early-stage next to other regions, at 5% of Asia-Pacific and 1% of global markets.
Sources
- HSBC: Malaysia, Singapore regional hubs for green financing
- Record year for ASEAN Green, Social, Sustainability Debt Issuance: Report (HSBC)
