Asia's sustainable bond market bucked the global trend and issuance grew strongly in the first half of 2022 despite volatility in the bond markets. Eastspring expects the market to continue growing despite heightened inflation risks and rising geopolitical concerns. The expanding universe should present increased opportunities and greater diversification for investors.
The Covid-19 pandemic helped draw attention to environmental and social issues in the last two years, in turn fuelling inflows into responsible investments and boosting issuance of sustainable debt (bonds and loans).
Environmental, social, and governance (ESG) debt funds attracted inflows of over US$135 billion in 2021, up from US$55 billion in 2020. Meanwhile, global sustainable debt issuance reached a new record of over US$1.4 trillion in 2021, almost double the previous year.
This momentum appeared to falter in 2022, as rising inflation and interest rates caused significant turmoil in global bond markets. Global sustainable debt issuance fell to US$645 billion in H1 2022,
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