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.
