KUALA LUMPUR, July 2 — Asian Development Bank (ADB) has proposed a new kind of sustainable development goals (SDGs) bond, the SDG Accelerator Bond, which could help countries reduce the perceived investment risk posed by an issuing entity, sector, or project with no track record on bond issuance.
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 Covid-19 pandemic has slowed down the momentum for sustainable and equitable growth in most of developing Asia and many countries are at risk of not meeting their SDG targets in 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,” he said.
ADB said according to the report, Southeast Asian countries issued a record UUS$12 billion (US$1=RM4.16) in green, social and sustainability bonds in 2020 but their financing needs have only grown amid the Covid-19 pandemic.
It said the SDG Accelerator Bond is built on global best practices in project finance and aimed to standardise the risk-return structure to ensure investor appetite and help local governments and new state-owned entities access funds.
It added that the framework would allow variations in fund structure among countries and issuers of the accelerator bond or other SDG bonds. — Bernama
