Malaysia Registered Growth in GSS+ Market 3 Years in A Row

According to HSBC, Malaysia posted its third consecutive year of growth in combined GSS+ (green, social and sustainability-linked debt), with a 30.5% jump in insurance last year compared to 2020.

Malaysia recorded more than USD1 billion of sustainability-linked bonds (SLB) and sustainability-linked loans (SLL) as well as five and eight deals in 2021.

The sustainability label remained the most prominent financing instrument accounting for about 51% of the cumulative market share.

Meanwhile, green debt (bonds and loans) accounted for 29% of the market, followed by 20 % 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, were 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 Berhad on the issuance of Malaysia’s first ever sustainability-linked sukuk,” managing director, head of sustainable finance and 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.

“The mobilisation of finance will be critical to achieve the Paris Agreement goals while mitigating the devastating effects of climate change forSoutheast Asia,” he added.

The sustainable debt market in the 5 largest ASEAN economies (Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Phillipines) continued to grow rapidly in 2021 with record issuance of GSS debt totalling USD24 billion compared to USD13.6 billion in 2020, surging by 76.5% year-on-year.

Sustainability-linked dent soared 220% to USD27.5 billion compared to USD8.6 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 dent, encompassing green bonds and green loans, remained the most popular in the GSS debt market in 2021.

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

However the region saw a small volume of social debt issuances (0.6%%) 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% of the cumulative use of proceeds of green debt issued from the ASEAN region between 2016 and 2021.

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