Singapore will launch its first sovereign green bond to raise as much as SGD2.4 billion ($1.7 billion). The Green Singapore Government Securities Infrastructure or Green SGS (Infra) will have a tenor of 50 years, with a maturity date of August 1, 2072. This will be the first time the Government of Singapore is issuing bonds with a 50-year term. SGS bonds that have already been issued have maturities ranging from two to 30 years. The proceeds from the issuance of the green bond will provide funding to projects with environmental benefits, including the Jurong Region Line and Cross Island Line.
Green Bond Market in Singapore
According to GlobalData, the value of green bonds in Singapore market stood at $8.1 billion in 2021 and it is expected to increase to $9.7 billion in 2022. To facilitate the growth of a thriving green finance market, the Singapore government announced that it will issue SGD35 billion in green bonds by 2030 to finance public sector green infrastructure projects. This is an increase from the SGD19 billion in green bonds that were originally announced in the Budget for 2021.
Singapore Green Bond Framework
Green SGS (Infra) will be guided by the Singapore Green Bond Framework and issued under the Significant Infrastructure Government Loan Act, which was passed by Parliament in 2021. The Singapore Green Bond Framework outlines the government’s intended use of the proceeds from green bond sales, the governance structure used to choose eligible projects, the operational strategy used to manage green bond proceeds, and the commitment to annual allocation and impact reporting.
Outlook
Singapore now joined other countries in Asia such as Hong Kong and South Korea in issuing green bonds. It being an international financial center, Singapore aims at positioning itself as an environmental finance hub. The country is already encouraging sustainable issuance with a program to fund sustainability certification of companies’ bonds and loans. However, its domestic green debt market is smaller than that of the fellow Asian financial hub, Hong Kong.
The issuance of sovereign green bonds is intended to support the country’s efforts to reduce its carbon footprints and expand its green finance market. The issuances of green bonds by the public sector will set a standard for the corporate green bond market, increase market liquidity for green bonds, and attract investors, capital, and green issuers, opening the door to more green finance activities in the private sector.
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