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Malaysia posts third consecutive year of growth in GSS+ market

03/08/2022 02:50 PM

KUALA LUMPUR, Aug 3 (Bernama) -- Malaysia registered its third consecutive year of growth in combined GSS+ (green, social and sustainability and sustainability-linked debt), with a 30.5 per cent jump in issuance last year compared to 2020, according to HSBC.

It said Malaysia recorded more than US$1 billion of sustainability-linked bonds (SLB) and sustainability-linked loans (SLL) as well as eight deals in 2021.

The sustainability label remained the most prominent financing instrument for Malaysia, accounting for about 51 per cent of the cumulative market share.

Meanwhile, green debt (bonds and loans) accounted for 29 per cent of the market, followed by 20 per cent from sustainability linked instruments, said the largest bank by total assets in Europe in a statement.  

“We are encouraged by the growth of the sustainable finance market in Malaysia, where we have played a key role in facilitating its development in recent years.

‘’In 2021, HSBC supported the government of Malaysia on the issuance of the world’s first sovereign US dollar denominated sustainability sukuk and Yinson Holdings Bhd on the issuance of Malaysia’s first ever sustainability linked sukuk,’’ managing director, head of sustainable finance & investments, ASEAN Kelvin Tan said.

He said while the sustainable finance market has been growing in the country and the wider ASEAN region, significantly more financing needs to be deployed in the region to adapt to climate change.

‘’This mobilisation of finance will be critical to achieve the Paris Agreement goals while mitigating the devastating effects of climate change for Southeast Asia,” he added.

The sustainable debt market in the six largest ASEAN economies (Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Philippines) continued to grow rapidly in 2021 with record issuance of GSS debt totalling US$24 billion compared to US$13.6 billion in 2020, surging by 76.5 per cent year-on-year.

Sustainability-linked debt soared 220 per cent to US$27.5 billion compared to US$8.6 billion in 2020.

‘’This growth reflects the region’s enthusiasm to allocate capital for the response to the COVID-19 pandemic along with facilitating long-term, low carbon and climate-resilient economic growth,’’ it said.

HSBC said green-labelled debt, encompassing green bonds and green loans, remained the most popular in the GSS debt market in 2021.

About 63.9 per cent of GSS deals originating from ASEAN in 2021 were green, followed by sustainability (35.5 per cent), with the latter showing an increase compared to 2020 (26 per cent).

However, the region saw a small volume of social debt issuances (0.6 per cent) in 2021.

It said buildings and energy continued to represent the main use of proceeds for green-labelled debt in ASEAN.

The combined sector accounted for 79.5 per cent of the cumulative use of proceeds of green debt issued from the ASEAN region between 2016 and 2021.


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