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Asia-Pacific gains momentum in impact bonds


May 2022

The Asia-Pacific region issued more impact bonds than any other part of the globe during the March quarter, driven by a surge in issuance in China. It’s a trend that’s been gaining momentum since 2Q 2021, with Korea and Japan also being key contributors.

While the EMEA (Europe, Middle East and Africa) region still held the number one spot in dollar terms, the value gap between the two regions narrowed appreciably.

Volatility in markets, spurred on by inflation and the war in Ukraine, triggered a fall in EMEA issuance particularly by supranational agencies. By contrast, APAC launched US$63 billion of impact bonds in the first quarter of this year, up 39 per cent on a year earlier.

Impact bond issuance globally trended upwards until the final quarter of 2021 before reversing in February this year, due partly to heightened volatility driven by geopolitical tensions and inflation fears. These fears hit EMEA and supranationals hardest. The decline in impact bonds appeared to reflect the broader decline in bond issuance.

Overall global issuance of impact bonds fell 20 per cent during this year’s March quarter to US$200 billion, compared to a year earlier. This was driven by a drop in government/agency bonds. As a result, corporate bond issuance, in dollar terms, was higher than government/agency bonds during the first quarter of 2022 for the first time in eight years.

The total return index value of the ICE Green, Social & Sustainable Bond Index fell 6 per cent over 1Q22.

China takes the lead

China issued more than half of all impact bonds in the APAC region and became the largest issuing country during 1Q22, ahead of Germany, France and the US. While issuance of corporate and sovereign bonds in absolute and dollar terms is dominated by the United States, it lags EMEA and APAC in impact bonds issuance.

“China is leading the way in terms of green bonds, but we are also seeing more interest in social bonds in the Asia region,” says Bernard Hsu, Director, Business Development – Reference Data and ESG for APAC at ICE.

Global issuance of green bonds, in dollar terms, during 1Q22 was more than social and sustainability bonds combined. China was the largest issuer, followed by Germany. France leads the way in terms of social bond issuance, followed by Korea. And the US recorded the highest issuance of sustainability bonds during 1Q22, followed by Chile and Korea.

Hsu says growth in the APAC region is creating demand for more information on impact bonds – the different types of impact bonds and the terms and conditions of each. The information can be used to better understand the issuing trend and investment opportunities.

Government and agency impact bonds are on the rise in the APAC region, says Michelle Wong, Regulatory Research Specialist in ICE’s Singapore offices.

“There’s potential that more impact bonds will be offered to retail investors, although it’s at early stages. Hong Kong recently launched its retail green bonds and the response was enthusiastic,” she says.

With this growth and expansion of buyers comes the need to better understand the market.

“Increasingly, regulators will be more vigilant and firms are going to want to drill into data specific to sustainability to avoid greenwashing,” Wong says. “We expect firms to seek more information like whether an impact bond has been verified, a greater understanding of what proceeds are used for, how eligible projects are selected and evaluated, and transparency on the management of proceeds.”

While green bonds are in higher demand than social or sustainability bonds, one emerging area within impact bonds is sustainability linked bonds, Wong says.

“These bonds have targets attached to the bond issuance. It might be to cut down on carbon emissions. But if targets are missed, the coupon steps up and higher interests are paid out. There is a promise linked to the bond. It’s early days and there’s little data on how issuers are meeting their targets, but there is interest in the area,” she says.

Hsu and Wong believe that as the market matures, investors will be interested in looking at the issuers’ ESG performance holistically. Rather than just relying on third party ratings, investors will shift to a more bottom-up approach and look at specific metrics within the ratings and this will drive the need for even more granular data.

Learn more about ESG data


  • China issued over half of all impact bonds in the APAC region and became the largest issuing country during the March quarter
  • More impact bonds will likely be offered to retail investors, with an enthusiastic response to Hong Kong’s retail green bonds
  • Sustainability linked bonds are an emerging area, where targets are attached to the bond issuance such as carbon emissions reduction.

1 All data and charts used in this report are based on data obtained by ICE Data Services and available via its product offerings.

Impact bonds are green bonds, social bonds and sustainability bonds that are either declared as such by the issuer or certified by a third party.