Indonesia first country in Asia to sell ‘greeniums’ globally

HONG KONG/JAKARTA: Indonesia will become the first Asian country to sell “green” bonds internationally as it looks to tap growing investor interest in climatefriendly investments.

Globally, US$155.5 billion (RM609.5 billion) of so-called green bonds were sold last year, according to the London-based Climate Bonds Initiative. But only a handful of governments have themselves sold such deals, where the proceeds are earmarked for investment in environmentally friendly projects.

Indonesia yesterday launched a five-year green sukuk bond, which means the deal will conform to Islamic finance norms as well.

While no exact target for the amount it expects to raise has been set, termsheets seen by being whipsawed by investors weighing positive economic growth prospects against worries about looming United States interest rate rises.

Indonesia is marketing a 10year sukuk bond at the same time as the green deal.

Initial price guidance sent to investors suggests the five-year green bonds would carry a coupon of 4.05 per cent and the 10-year notes, 4.70 per cent.

Global green bond issuance hit a record for the fifth consecutive year last year.

Bankers expect further growth in the market this year as investor demand begins on occasion to produce so-called “greeniums” where green bonds can be sold at a premium — lowering borrowing costs — to regular bonds.