$94 billion in sustainable debt issuance in the Middle East, North Africa and emerging markets in Asia and the Pacific
DUBAI, 18th November, 2018 (WAM) – A new research report issued by the Dubai Financial Services Authority and the Hong Kong Monetary Authority, in cooperation with Bloomberg New Energy Finance as a knowledge partner, showed that the volume of rated sustainable debt issuances in the Middle East and North Africa region and emerging markets in Asia-Pacific has tripled since 2020 to reach $94 billion, with a faster growth rate than the advanced economies of the Asia-Pacific region, and 52% of these issuances came from green bond markets, Mainly driven by financing major infrastructure projects in the energy sector.
The United Arab Emirates and Saudi Arabia have accounted for 74% of total issuances in the Middle East and North Africa region since 2023.
36% of sustainable bonds financed renewable energy projects, giving them the largest share of financing.
The report, titled “Scaling Sustainable Debt in Emerging Markets,” presents a set of research findings, highlighting the enormous potential of the segregated debt market, including green and blue bonds and bonds linked to social responsibility and sustainability, in supporting the sustainable development strategy in emerging markets.
The report says that rated sustainable debt markets in the MENA region and emerging markets in the Asia-Pacific region have a great opportunity for growth, as many issuers and borrowers rely on unrated debt instruments to finance sustainable projects.
Pathways to growth include government support in providing guidance to overcome challenges facing issuers when offering bonds to the market, encouraging more institutional issuance, in addition to expanding the scope of tools beyond green ratings and traditional structures.
The report also presents three case studies on innovation in sustainable financing instruments outside traditional ratings, repayment periods and structures, including blue bonds from DP World, sustainability-linked loan financings from Emirates NBD, and long-term green bonds and financings from MTR Corporation Limited.
The report confirms that regulators in the MENA region and emerging markets in the Asia-Pacific region are working to strengthen transitional and social financing frameworks, tighten disclosure standards, and stimulate innovation in sustainable financing tools.
At the level of the UAE, the report states that the government is making unremitting efforts to diversify the energy mix, reduce carbon emissions, and consolidate the country’s position as a regional center for green and transitional financing by launching qualitative policies such as the UAE Energy Strategy 2050 and the Dubai Clean Energy Strategy 2050, which are initiatives that have opened the way for promising investment opportunities in the field of sustainable infrastructure and low-carbon projects.
The report notes that the Sustainable Finance Working Group in the United Arab Emirates, of which the Dubai Financial Services Authority is one of the founding members, recently issued draft principles for climate transition planning, which aim to help financial institutions develop reliable, transparent and effective transition plans.
Mark Steward, CEO of the Dubai Financial Services Authority, said that this research provides valuable insights and ideas about the development of sustainable debt in the Middle East and North Africa region and emerging markets in the Asia-Pacific region, and that the unprecedented mobilization of sustainable debt issuances worth US$94 billion represents an indication of growing investor confidence and the flexibility of markets, indicating that the Authority intends to continue supporting all forms of sustainable financing and transitional financing to maintain the strength and credibility of the markets in the Dubai International Financial Center. The UAE and the entire region in the long term.
For his part, Eddie Yu, CEO of the Hong Kong Monetary Authority, said that sustainable debt represents a promising tool to bridge the climate financing gap estimated at trillions of dollars in emerging markets, and that the joint research seeks to find solutions to overcome obstacles for issuers and explore growth opportunities.
He added: “As the most prominent sustainable finance center in Asia, and responsible for arranging 45% of international green bond issuances in the region during 2024, Hong Kong continues to consolidate its commitment to harnessing its advanced infrastructure and deep expertise to support emerging markets in achieving their sustainable development goals.”
In turn, John Moore, CEO of Bloomberg New Energy Finance, said that sustainable debt contributes to establishing confidence and enhancing transparency in financial markets, and that the effort made by the Hong Kong Monetary Authority and the Dubai Financial Services Authority to develop sustainable debt markets is a fundamental pillar for expanding the scope of financing and investment and stimulating the transformation process in the energy sector.
The most prominent points contained in the report will be discussed during the joint climate finance conference between the Dubai Financial Services Authority and the Hong Kong Monetary Authority, scheduled to be held on November 26 in Dubai, under the slogan “Shaping Tomorrow: Harnessing Green Finance to Achieve Sustainable Development.”
This conference will bring together elite policymakers, senior sector leaders and investors from the Asia and Middle East regions to discuss the important role of innovation, flexibility and collective cross-border synergy in promoting sustainable finance.
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