Huge demand for Asia’s first sustainability-linked bonds

Demand for Thailand’s sustainability-linked bonds (SLBs), the first in Asia, has been overwhelming, with investor interest nearly three times the issuance amount, according to the Public Debt Management Office (PDMO).
The book-building process for the bonds on Nov 19 generated huge interest from investors, with purchase proposals totalling 55.3 billion baht, or 2.76 times the announced issue size of 20 billion baht, said Patchara Anuntasilpa, the PDMO director-general.
As a result, he said, the PDMO increased the issue size to 30 billion baht at an annual interest rate of 2.70%. Investors included life insurance companies, funds, financial institutions, securities firms, asset management companies and foreign investors.
Thailand is the first Asian government and only the third globally, after Chile and Uruguay, to successfully issue SLBs, Mr Patchara said.
SLBs are financial instruments designed to promote sustainable environmental and social development. Issuers must adhere to predefined key performance indicators (KPIs) and sustainability performance targets (SPTs).
The KPIs and SPTs for the issue include: capping Thailand’s greenhouse gas emissions (excluding land use and forestry) at 388,500 kilotonnes of CO2 equivalent by 2030, akin to a 30% reduction from the business-as-usual baseline; and achieving registration of at least 440,000 new zero-emission vehicles in the passenger car and pickup categories by 2030.
The fundraising framework for the bond issue was certified by DNV (Thailand), an independent external verifier, confirming that the KPIs and SPTs are ambitious, aligned with UN Sustainable Development Goals, and compliant with the standards set by the International Capital Market Association and the Asean Capital Market Forum.
According to Mr Patchara, the PDMO will provide ongoing reporting and monitoring of SPT progress to ensure transparency and reinforce investor confidence.
The office also plans to issue a 15-year benchmark SLB to serve as a pricing reference and improve liquidity in the secondary market, supporting the sustainable development of the capital market, he said.
Mr Patchara said SLBs encourage best practices for both the public and private sectors, driving Thailand towards a sustainable economy and society.
They also signal to the international community of Thailand’s commitment to combatting climate change and promoting long-term sustainability, he said.
The PDMO plans to continue its sustainable finance efforts, including the issuance of a sustainability loan later this year to fund clean energy transport projects, said Mr Patchara.