The hardest part is done: Macau is starting to stand out in the niche green bond market
Macau Business | April2024 | Special report | Modern finance
Out of the total 156 outstanding bonds issued or listed in Macau mentioned in the previous pages, there were 28 green bonds, whose outstanding value increased by 39.4 percent to MOP 75.4 billion (2022) .
And of the total number of bonds issued or listed in Macau accumulated, 30 of them were green bonds (of which 2 have matured) with a cumulative value of 77.3 billion patacas.
In 2022 alone, newly issued or listed green bonds totaled 12, corresponding to a value of 23.3 billion patacas.
“Green bonds constitute the starting point for the progression of green finance,” underlines the Monetary Authority (AMCM). “With the strengthening of the physical and institutional infrastructure of the bond market, it will be easier for issuers to issue green bonds in Macau.”
“Encouraged by the SAR Government and thanks to the joint efforts of the sector, in recent years, Macau’s green financial products and services continue to be enriched,” continues the regulator, through responses sent to Macau Business.
Of the 30 bonds issued or listed in Macau, there was already a bit of everything: so-called blue bonds (the capital raised by the issuer is intended to support investments in healthy oceans and blue economies aligned with the SDGs 14), to bonds on the theme of biodiversity, but also carbon neutral bonds, etc. Last year, for example, Zhuhai Rural Commercial Bank’s 500 million RMB issuance was the first lotus bond, that is, an RMB-denominated offshore bond issued in Macao and listed on MOX, the kind issued by a local bank in China. It was also the first unsecured green bond issued by a mainland entity in Macau.
In August 2023, the Guangdong provincial government proposed its first issuance of local government green bonds amounting to RMB 1 billion to Macau, which was understood, including by the AMCM, as “a good example for businesses on the mainland, especially in the Greater Bay Area (GBA), helping to encourage and guide the issuance of more green bonds in Macau.
In addition, local financial institutions have gradually introduced green personal consumer loans and green loans for small and medium-sized businesses. “These initiatives facilitate financing for local development of green energy and green transport. »
The Monetary Authority recalls that in addition, these institutions collaborate with their GBA counterparts to execute cross-border transfers of green credit assets.
At the end of the third quarter of 2023, the total number of green bonds issued by Macau banks stood at seven, with a cumulative issuance amount of 28.7 billion patacas. Macau banks’ outstanding green loans increased 58.6 percent year-on-year to 24.6 billion patacas.
The different partners seem to agree on the idea that Macau can position itself as a reference place for the issuance of different types of green bonds.
“MOX actively uses the city’s geographic advantages and platform role to facilitate the development of a green and sustainable financial market, and to help attract green and sustainable financial projects and bonds,” reads a statement. press release from the company which manages the local bond market. It is no coincidence that MOX was the third exchange in Asia to join the Climate Bonds Partners Program, an investor-focused non-profit organization promoting large-scale investments in the low-carbon economy , after Taipei Exchange and Hong Kong Exchanges and Clearing. Limit.
And outside of Macau, that picture seems to be starting to take shape.
“The Macau bond market can explore more innovative financial products based on the existing foundations of green financing, including carbon neutral bonds, interbank debt financing instruments and sustainability-linked bonds,” Annie Shen and Christine Chen , lawyers at Fangda Partners, a law firm. Shanghai-based law firm, recently said.
Another opinion, that of Grace Hui, Hong Kong-based financial expert, founder and CEO of Net Zero Asia Limited: Macau has the potential to develop a green bond market by focusing on a niche market linked to fundraising for the process of adaptation to the impact of the crisis. climate change, namely sea level rise. “You can have a very specialized sustainable financial market,” Ms. Hui said.
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