Social Bonds Grow as Green Debt Slows in APAC
New debt has been diverted to social bonds aimed at addressing public health and economic inequalities due to the coronavirus pandemic, according to S&P Global Market Intelligence.
The issuance of green bonds in the nine largest Asia Pacific markets, which reached $5.22 billion in the second quarter of the year, or 10 percent of the global issuance, was the lowest quarterly total since the first quarter of 2017 ($4.13 billion), the financial data firm said, citing Climate Bonds Initiative, a U.K. nonprofit organization that created the green bond standards.
At the same time, Asia-Pacific issuance of social bonds, which raise debt for projects with positive social outcomes, rose 29 percent this year through June 15 from a year earlier, with volumes of social and susintablility bonds – used for both environmental and social purposes – surpassing green bonds for the first time in April, S&P said. China, the largest green bond issuing market in the region, issued $4.37 billion in internationally aligned green bonds in the first half of the year 2019, a 63 percent dip from the year before.
The report cited several analysts who said that businesses are shifting away from green bonds to social bonds as a result of the economy's uncertain outlook and headwinds amid the coronavirus outbreak.
