The ESG Phenomenon - Citigroup
Developments and commentary in and around the ESG investment space.
The US banking group said it has clocked up $40 billion in fundraising for Asia-Pacific clients to support their sustainable financing needs – a rise of more than 500 per cent from the same period in 2020.
Highlight transactions include Alibaba Group’s $5 billion four-part offering in February, which included a 20-year sustainability tranche – its debut sustainable capital markets transaction, Citigroup said in a statement. From the hardware sector, SK hynix issued a $2.5 billion bond in January with a 10-year green tranche. Citigroup also led a $3 billion sukuk – Shariah-compliant debt – for the Republic of Indonesia in June, which included a 30-year “green tranche” – which it said was the longest-ever green offering in Islamic format.
The bank said issuers of debt can often raise cheaper financing by adopting green bonds, obtaining favourable pricing – a “greenium.” Issuers are taking advantage of higher oversubscription levels for these transactions, especially in busy or difficult markets.
A decade ago, the environmental, social and governance-themed (ESG) investing market was led by niche investors with assets under management not exceeding $5 billion, according to market estimates. Citigroup said that globally, assets under management in ESG formats exceed $30 to $40 trillion.