RAM sees bond market gaining from green investment

PETALING JAYA: Malaysia’s well-established bond and sukuk markets are poised to benefit from the anticipated green investment market growth, given that infrastructure represents a significant portion of the Malaysian market, says RAM Ratings.

According to the Green Finance Opportunities in Asean report, the demand for additional Asean green investments is envisaged to come up to an estimated US$3 trillion (RM12.25 trillion) between 2016 and 2030, with 60% earmarked for infrastructure.

“Green finance and Islamic finance are rapidly and successfully converging in Malaysia.

“Malaysia’s success in sustainable finance has been catalysed by the regulators,” said RAM Ratings deputy CEO Promod Dass during a panel session at the recently held 3rd Annual Symposium on Islamic Finance.

These drivers are, namely, the release of the Sustainable and Responsible Investment (SRI) Sukuk Framework by the Securities Commission (SC) in 2014, as well as the Asean Green Bond Standards by the SC-led Asean Capital Markets Forum in November 2017.

There has since been market development following the release of the aforementioned framework and standards, which include RAMrated pioneer sukuk like Khazanah Nasional Bhd’s Sukuk Ihsan – the world’s first SRI sukuk in 2015 – and Tadau Energy Sdn Bhd’s recent issuance of the world’s first green SRI sukuk.

Permodalan Nasional Bhd’s proposed Merdeka Asean Green SRI sukuk will herald another market first.

“Credit rating agencies are a key part of the ecosystem that link the financial and real economies in driving change, to achieve a nation’s commitments under the United Nations’ Sustainable Development Goals,” added Promod.