With the aim of riding the momentum of a strong Asian G3 bond 2020 issuance year and generally positive sentiment around environmental, social and governance (ESG) bond issuances, several Asian high-yield issuers tapped the bond market looking to achieve some of their fundraising objectives early in the new year.
In the first working week of 2021, Chinese property companies like Yuzhou Group, Zhenro Properties and Modern Land executed their green bond deals, with Yuzhou Group and Zhenro Properties raising US$562 million and US$400 million respectively.
In India, Shriram Transport for the second year in a row is in the market with its second social bond, following its debut transaction last year, which focused on generating employment opportunities for individuals in India.
“Our ability to help C-suites navigate their way into green or ESG products has really unlocked additional liquidity and helped those companies achieve their own sustainability goals,” shares a debt capital markets banker.
Despite the economic volatility and uncertainty caused by the Covid-19 pandemic, the sustainable bond market, which mainly consists of green and social bonds, has rebounded to pre-Covid-19 levels after experiencing a strong Q3 2020 that saw a record US$127.3 billion generated by issuers, according to data from Moody’s Investor Service. Moody’s predicts that sustainable bond issuance could approach US$425 billion in 2020, while green bond volumes should be around US$250 billion.
The resilience of the sustainability bond market globally has been an attractive draw not only for high-yield issuers, but also for investors looking for yield and resilient assets. “While the March 2020 sell-off hurt global credit markets – from US Treasuries to emerging markets – we observed greater price resilience in the Asian corporate green bond asset class in March 2020 and a strong recovery in April 2020, relative to conventional indices.
Green bonds not only provide Asian corporates with essential funding for infrastructure and environmentally friendly capital expenditures, they also provide investors with a wide range of yield choices and potential value resilience amid volatile markets,” states an Invesco Fixed Income commentary.