APAC (ex-Japan) green, sustainability loans end five quarters of QoQ growth in 1Q22

Data InsightDebtDynamics 20 April

APAC (ex-Japan) green, sustainability loans end five quarters of QoQ growth in 1Q22

The volume of green and sustainability-linked loans (SLL) obtained by Asia Pacific (ex-Japan) borrowers in 1Q22 fell 33.2% from the previous quarter, ending five consecutive quarters of QoQ growth.

The total volume of syndicated and club loans labelled green and sustainability-linked was USD 20.82bn-equivalent in 1Q22, compared with the record high of USD 31.16bn completed in 4Q21. The 1Q22 tally was only marginally lower than the USD 21.96bn registered in 3Q21. On a YoY basis, 1Q22 volumes increased 150% from USD 8.33bn in 1Q21.

The volume of SLLs remained ahead of green loans’ in 1Q22 (USD 12.37bn versus USD 8.45bn) – a consistent trend from the beginning of 2021 as more companies adopt new environmental, social and governance (ESG) reporting framework. Maiden issuers in the SLL space in 1Q22 included Australian rolling-stock business Reliance Rail with a AUD 1.875bn (USD 1.36bn) 21-year loan, Australian electricity-distribution-network provider Endeavour Energy with a AUD 920m (USD 681m) five-year loan and India’s Glenmark Pharmaceuticals with a USD 228m five-year loan.

Australian companies led the way in sustainable loans in the region in 1Q22 with an aggregate USD 6.52bn-equivalent, followed by Hong Kong with USD 4.88bn and China with USD 3.89bn. The largest three deals closed in 1Q22 were Sydney Airport’s AUD 4.4bn (USD 3.17bn) two- and five-year tranche sustainability-linked loan, Chinese e-commerce company JD.com’s USD 2bn five-year green loan and a HKD 12.95bn (USD 1.66bn) five-year green loan for Hysan Development and Chinachem Group for the development of a commercial project in Hong Kong’s Causeway Bay district.

While loans labelled as green or sustainability-linked edged lower QoQ in 1Q22, the share of such deals in the total APAC (ex-Japan) volume has progressively increased each quarter since 3Q20 – 29.5% in 1Q22, 24.3% in 4Q21, 18.9% in 3Q21 and just 3.6% in 3Q20.

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