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Updated May 15, 2020

A dip

The coronavirus shutdown has made the air cleaner around the world. It seems to be bringing short-term environmental benefits, but it may hinder the energy transition in the long term. Since the outbreak began, investors have reduced investments in green assets. According to Moody’s, issuance of green debt in the first three months of the year totaled US$33.9 billion, a 37% decline compared with the corresponding period of 2019, and a 49% decrease from the previous quarter.

Sustainable bond issuance, including green and social bonds, totaled US$7.7 billion in the first quarter of 2020 in the emerging market, the lowest single-quarter level since 2018. This reflects emerging markets’ fiscal vulnerability to global crisis and their lack of room for monetary maneuvering.
 

Growth potential

Despite depressed green issuance, Moody’s sees strong potential for sustainable bond in emerging markets. In fact, the latest report shows that green bond issuance in emerging markets rose 21% in 2019. As huge investment is needed to fund renewables projects in emerging markets, green issuance is expected to rebound.

It’s worth noting that ASEAN countries have picked up remarkably in the green bond market due to supportive regulations and guidelines. Last year, their green bond and loan issuance reached US$8.1 billion, almost doubled the total from 2018. Singapore alone contributed to 55% of the ASEAN green debt issuance, up from 29% in 2018.

ASEAN issuance represented 3% of the global total and 12% of the Asia-Pacific region in 2019. The ASEAN countries’ efforts toward a sustainable low carbon future is expected to continue to drive growth in the future.

According to the latest report from Europe’s largest asset manager Amundi, green bond market stays resilient during the COVID-19 crisis, so its value remains apparent to investors, who now view green issuers as more long term oriented and able to weather short-term volatility. In wake of crisis, the world awakens to urgent need for green investment and a more resilient economy.


Source:
Green Bond Issuance Dips in Q1, but Long-Term Picture Remains Bright
Emerging market green bond issuances rise 21%
ASEAN Green Finance Report 2019: HSBC & Climate Bonds launch major analysis of green investment and policy directions in SE Asia
EMERGING MARKET GREEN BONDS - REPORT 2019