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Asia's best sustainable finance issuers, advisers named
The Asset Triple A Sustainable Capital Markets Regional Awards 2020 winners take a bow after a testing year
26 Jan 2021 | The Asset

The Covid-19 pandemic created a lot of uncertainties and fear that it would decimate Asia's capital markets activity when it started to unravel in the early part of 2020. Issuance volume and fund raising forays, as expected, were muted as issuers and borrowers shelved their financing plans and investors digested the impact of the global health crisis and addressed their mark-to-market losses. But the market eventually recovered and, in fact, ended the year in record-breaking fashion.

Refinitiv figures show Asia G3 bond issuance in Asia, outside of Japan and Australasia, rose 6.6% to US$373.32 billion in 2020, compared with US$350.18 billion a year earlier. This was the highest annual volume since 2010. The increase bucked the slowdown in issuance activity in China – the largest G3 bond market in the region – where volume fell to US$177.58 billion from US$183.31 billion in 2019, due to the fewer number of deals printed during the year.

The lower China volume was reflected in the decline in its high-yield trade, which dropped 17% to US$43.31 billion in 2020 from US$52.19 billion in 2019. As China is the region’s largest high-yield bond issuer, the decline of issuance activity in the country impacted the Asian high-yield space’s overall volume, which dropped to US$70.18 billion in 2020 from US$82.73 billion a year earlier.

Last year also witnessed strong deal flow in the equity capital markets by companies domiciled in Asia, outside of Japan and Australasia, with proceeds surging 67.5% to US$371.44 billion from US$221.74 billion in 2019, according to Refinitiv. Follow-on offerings accounted for 54.7% or US$203.22 billion of the total, which was more than double the US$100.88 billion recorded in 2019.

Initial public offerings (IPOs) made a strong recovery during the same period with volume climbing from US$66.48 billion to US$111.26 billion. This was the second-highest IPO volume recorded in 11 years after the US$158.88 billion raised in 2010. Convertible bond volume also went up, rising to US$56.96 billion in 2020 from US$54.38 billion in the preceding year.

What helped underpin the Asia G3 bond issuance in 2020 was the proliferation of green, social and sustainability bond transactions, which issuers, including the sovereigns, tapped to fund their Covid-19 relief efforts and attract environmental, social and governance (ESG) investors. Proceeds were usually earmarked to provide financial support to small and medium-sized enterprises (SMEs) and to small and home offices adversely impacted by the pandemic. Funds were also allocated to eligible social projects, such as affordable housing and infrastructure, and essential services. For green bond issuers, the proceeds were used to fund eligible green projects, including green buildings, energy efficient projects, pollution prevention and control, and sustainable water and wastewater management.

Spearheading the commitment to sustainable finance was the Kingdom of Thailand (KoT), which is voted as Sovereign Issuer of the Year in The Asset Triple A Sustainable Capital Markets Regional Awards 2020. The KoT raised a total of 50 billion baht (US$1.67 billion) in sustainability bonds in 2020 – the first of its kind in the Asean region – accessing the market in August for 30 billion baht in two tranches. The first tranche was a 10-billion-baht green bond, the proceeds of which were used to finance the Bangkok area’s Mass Rail Transit (MRT) orange line project, and a 20-billion-baht social bond, with the funds earmarked for projects designed to prevent and/or alleviate unemployment stemming from the Covid-19 pandemic.

The KoT then re-opened the deal in November and raised another 20 billion baht to refinance the expenditures on the expansion of the MRT orange line project. This offering received a climate bond standard certification from Climate Bonds Initiative.

Chinese property developer Zhenro Properties Group was selected as Corporate Issuer of the Year as it expanded its financing objectives to cover future ESG targets. The company tapped the green bond market twice in 2020, pricing its inaugural offering in September with a US$300 million 4.4-year non-call 2.4-year green senior notes. The deal attracted the participation of ESG investors, which enhanced the quality of the order book. Over 34% of the order book was allocated to European investors and the book was skewed towards to ESG-dedicated real money accounts.

The company returned to the market in November with another US$200 million 363-day green senior notes, with the demand peaking at US$2.3 billion. On the back of such strong demand, Zhenro was able to print the deal with a negative new issue concession of between 5bp and 10bp. The key objective of the company’s green strategy is to finance projects related to green buildings, renewable energy, energy efficient projects, pollution prevention, and sustainable water management.

Following the pricing of its first sustainability bond in October 2018, Korean lender Kookmin Bank continued to pursue the sustainability theme in its fund-raising in 2020, and this helped it win the Financial Institution Issuer of the Year award. The bank priced five sustainability-related transactions in different currencies during the year, raising over US$2.38 billion equivalent.

It first tapped the market in April with a 400-billion-won (US$364 million) Covid-19 response social bond, followed by a Covid-19 response sustainability bond in May amounting to US$500 million. It returned to the domestic bond market also in May with another sustainability bond amounting to 450 billion won.

Then, in July, Kookmin priced the first euro-denominated sustainability covered bond issued by a Korean bank amounting to 500 million euros (US$610 million), with the proceeds again earmarked for Covid-19 relief efforts. In October, the bank printed the inaugural Covid-19 response sustainability subordinated tier-2 bond issued out of Asia. It amounted to US$500 million and achieved the lowest coupon among all subordinated paper issued by Korean commercial banks.

Bank of China (BoC) is another financial institution that distinguished itself in sustainable finance in 2020. As the other winner of the Financial Institution Issuer of the Year award, the bank’s Macau branch priced in February a HK$4 billion (US$516 million) and a 1-billion-pataca (US$125 million) SME-themed Covid-19 social bond. This is the first-ever social bond from a Chinese issuer in the international capital markets, with the proceeds used to support micro, small and medium-sized enterprises in Macau in an effort to address their financing difficulties amid the pandemic.

In September, the BoC branches in Macau and Paris printed in dual currencies the first blue bond issued by a commercial bank globally amounting to US$500 million and CNH 3 billion (US$461,50 million). This is also the first blue bond out of the Asia-Pacific region and only the fourth in the world. The proceeds are used to support ocean conservation by financing marine and ocean-based projects that have positive environmental, economic and climate benefits.

The increasing number of issuers and borrowers embracing sustainable finance and embedding this theme in their business model is also being manifested in the heightened competition among banks to win ESG Bank of the Year award. Seven banks earned the nomination for this award category – last year’s winner BNP Paribas, BofA Securities, Citi, Credit Agricole CIB, DBS, Deutsche Bank and ING. These banks figured prominently in several winning transactions in 2020 as structuring advisers and deal arrangers. Other coveted awards still up for grabs in The Asset Triple A Sustainable Capital Markets Regional Awards 2020 are that of Best Sustainable Finance Adviser and Best Green Adviser, in which several banks are also nominated.

Meanwhile, DBS is chosen as Best Social Impact Adviser on the back of arranging deals whose proceeds are used to support the financing of affordable housing, projects related to employment generation, loans to microfinance institutions and enterprises benefitting women, and tertiary educational institutions. HSBC was picked as the Best Renewable Energy Adviser for its participation in such deals as ENN Energy Holdings, ReNew Power, and AC Energy.

Another outright winner is Sustainalytics, which is named as Best Second-party Opinion Provider with its participation in several sustainable finance market defining transactions, such as the KoT sustainability bond, Kaisa Group Holdings’ sustainability bond and Seaspan Corporation’s sustainability-linked credit facility.

In other yet-to-be-announced major award categories, three banks – Citi, DBS and HSBC – are nominted for Best Bank honours, while four banks – Citi, Credit Suisse, DBS and Morgan Stanley – are nominated for the award of Best Corporate and Institutional Adviser. The Best Equity Adviser award has five nominees, namely BofA Securities, Citi, Credit Suisse, Goldman Sachs and Morgan Stanley, while the nominees for Best Bond Adviser are Barclays, Citi, Credit Suisse, DBS, Deutsche Bank, HSBC and Standard Chartered.

In the other advisory categories with outright winners, Credit Suisse scoops several awards, including Best Commodities Adviser, Best Financial Institution Group (FIG) Adviser, Best New Economy Adviser, Best Real Estate Adviser and Best TMT (technology, media and telecom) Adviser – which its competitors regard as the bank’s crown jewel in Asia. Other winners are Morgan Stanley as Best Consumer Adviser, Citi as Best Healthcare/Pharmaceutical Adviser and HSBC as Best Transport Adviser.

For the Best Issuers winners, please click here

For Best Banks and Best Advisers winners and nominees, please click here

The virtual awards ceremony will be held on 18 March, 2021, please reserve your place by contacting events@theasset.com

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