To give a boost to environmental initiatives, City Developments Limited (CDL) launched the first green bond by a Singapore company through its subsidiary CDL Properties.
The bond raised SGD100 million at 1.98 per cent fixed rate due in 2019. Investors consisted mainly of financial institutions and fund managers.
Moody’s Investors Service expects global green bond issuance will reach another record in 2017, and could even rise to USD 206 billion, following an increase of 120 per cent to USD 93.4 billion in 2016.
Through a press release, CDL observed that the demand for green bonds has been fuelled by the Paris Climate Change Agreement, which took effect on November 4, 2016. Singapore has since ratified the Paris Agreement, and pledged to reduce its carbon emissions intensity by 36 per cent from 2005 levels by 2030 as well as stabilise its emissions with the aim of peaking around 2030. Even more investors are looking to fund low-carbon and climate-resilient projects.
It added, “Increasingly, the Singapore Government is taking steps to match the demand for sustainable investments. Green bonds are among a wider range of sustainability-oriented benchmarks, funds and products that the Monetary Authority of Singapore is seeking to promote locally.”
CDL deputy chief executive officer Sherman Kwek said, “It is clear that for the next 13 years, real estate companies have a large role to play in mitigating climate change and contributing towards Singapore’s greening and green house gas emissions reduction goals. We would certainly be keen to explore more green bond issuances in future.”
The proceeds of CDL’s green bond will be used to repay the SGD100 million loan extended by CDL to CDL Properties, which owns Republic Plaza in the Central Business District of Singapore.
Further, the success of CDL’s inaugural green bond issuance paves the way for other Singapore firms to tap into the fast- growing green bond market to finance green building projects and sustainability initiatives.