South Korea has overtaken China to lead Asia in sales of socially-responsible bonds this year, as global issuance of debt to fund the fight against Covid-19 surges.
Borrowers in Korea have sold $11.9 billion of environmental, social and governance notes so far this year, the most in the Asia-Pacific region, followed by Japan with $9.5 billion and China with $9 billion, Bloomberg-compiled data show. China was Asia’s biggest issuer of such debt from 2016 to 2019.
“Issuers prefer to sell bonds labeled ‘ESG’ due to growing investor demand for them in Korea,” said Han Gwangyeol, a Seoul-based credit analyst at NH Investment & Securities Co. “The ESG debt market will continue to expand globally, and that boom will help improve the performance of the notes in the mid- to long-term.”
Issuance of social bonds by Asian borrowers has surged to $17.6 billion in 2020 from $3.6 billion a year earlier. Driving the increase is a rush to sell notes to pay for the battle against the pandemic, which has caused more than 749,000 deaths around the world and which the International Monetary Fund predicts will result in the global economy shrinking 4.9% this year.