KUALA LUMPUR – The Asian Development Bank (ADB) has proposed a new kind of Sustainable Development Goal (SDG) bond, namely the SDG Accelerator Bond, which could help countries reduce the perceived investment risk posed by an issuing entity, sector or project with no bond-issuance track record.
The bank said the proposal is contained in its latest publication, titled “Accelerating Sustainable Development After Covid-19: The Role of SDG Bonds”.
“The new bond proposes to combine exit guarantees and other credit-enhancement structures with incentives to help countries meet SDG targets,” it said in a statement today.
Vice-president Ahmed M. Saeed said the pandemic has slowed the momentum for sustainable and equitable growth in most of developing Asia, and many countries are at risk of not meeting their SDG targets on climate resilience, gender equality and human development.
“For countries looking to fund sustainable projects and programmes on a large scale, capital markets represent an underused but viable mechanism to bring in SDG investments.”
ADB said according to the report, Southeast Asian countries issued a record U$12 billion (RM49.99 billion) in green, social and sustainability bonds last year, but their financing needs have only grown amid the coronavirus crisis.
The SDG Accelerator Bond is built on global best practices in project finance, and aims to standardise the risk-return structure to ensure investor appetite and help local governments and new state-owned entities access funds, it said.
It added that the framework will allow variations in fund structure among countries and issuers of the accelerator or other SDG bonds. – Bernama, July 2, 2021
