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The Monetary Authority of Singapore (MAS) on Thursday (August 4) announced the country’s first green bond issuance, setting a precedent for further green issuances by corporates and governments in the region.
The 50-year, S$2.4 billion ($1.7 billion) bond was priced at 3.04% and saw “strong” demand from institutional investors during the book-building process, according to the release. A S$50 million tranche was made available to individual investors from August 5.
Mushtaq Kapasi, managing director and chief representative for APAC the International Capital Market Association (ICMA), welcomed the new issuance, which aligned with ICMA’s Green Bond Principles 2021, and the ASEAN Green Bond Standards 2018. The framework was externally reviewed by second-party opinion provider, Sustainalytics.
“The sovereign benchmark will have a positive influence on regional corporate issuers considering sustainable finance and will strengthen market standards on disclosure and transparency. Ultimately, the Singapore green bond sends a strong signal across the region on the role that sustainable bonds can play to support transition to a low-carbon economy,” he told FinanceAsia.
The issuance follows the launch of a green bond framework in June this year, which highlights renewable energy, green buildings, clean transportation, wastewater management, and climate change transition as areas for use of the proceeds.
On how the government will prioritise eligible projects, a MAS spokesperson told FA that these would have to meet the criteria under the Significant Infrastructure Government Loan Act (SINGA) and the Singapore Green Bond Framework. The contact added, “The current project pipeline includes the expansion of electric rail network, namely the Jurong Region Line and the Cross Island Line. We will update the pipeline as and when there are other eligible projects.”
DBS Bank, Deutsche Bank, HSBC, OCBC, and Standard Chartered acted as bookrunners for the latest transaction.
The long tenure also contributes to the development of Singapore’s bond market, the announcement said, and could set the precedent for longer-tenure corporate bonds.
In its 2022 Budget, the government announced plans to issue up to S$35 billion of public sector green bonds by 2030, to support Singapore’s sustainability agenda.
The next green bond issuance is expected to take place in 2023, though the method for its issuance has yet to be decided, the MAS spokesperson explained.
Singapore’s efforts to promote green finance are among the most advanced in the region. In 2017, it introduced the Green Bond Grant Scheme, which was later expanded and renamed the Sustainable Bond Grant Scheme, to help first-time sustainable bond issuers cover certification and compliance costs, and promote the adoption of internationally accepted standards.
Since then, over S$25 billion of green, social, sustainability and sustainability-linked bonds have been issued in Singapore, including approximately S$18 billion worth of green bonds, with issuance volumes growing almost fourfold from 2020 to 2021. While MAS does not publicly disclose the number of issuers who have tapped the grant scheme, these are known to include regional issuers such as Ayala Corporation subsidiary, AC Energy.
In line with the country’s wider sustainability goals, the central bank continues to take measures to support the country’s sustainable finance ecosystem, the MAS spokesperson added. These include recently issued information papers on how banks and other financial institutions should manage environmental risks; ongoing efforts to convene the industry to develop a taxonomy around the classification of financial businesses’ activities, with the aim of to improving disclosures and mitigating greenwashing; and a project to enhance access to quality ESG data through technology.
The Singapore stock exchange (SGX) has also proposed a roadmap for mandatory climate-related financial disclosures by listed entities.
Government bodies that have issued green bonds include the Housing & Development Board (HDB) which issued its inaugural, S$1 billion green bond in March this year.
