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Green Bonds for Infrastructure Development in Asia

In a year characterized by uncertainty, green bonds issuance rebounded in the second half of 2020 to reach a record-breaking US $290.1bn by the end of Dec’20, compared to the prior record of US $266.8 bn set in 2019. Though growth was subdued due to the Covid-19 pandemic, but increased focus on climate change and environment and support of low- and middle-income countries would increase the development of this market.

Green Bonds refer to instruments where the proceeds are used to finance or refinance, in part or in full, new and/or existing eligible Green Projects. They can be issued by central and local governments, banks, or corporations. The green bond label can be applied to any debt format, including private placement, securitization, covered bond and labelled green loans which comply with the Green Bond Principles (“GBP”) or the Green Loan Principles (“GLP”).


Green Bonds - Basic Principles

A green bond is a fixed-income financial instrument for raising capital from investors through the debt capital market. Typically, the bond issuer raises a fixed amount of capital from investors over a set period (the “maturity”), repaying the capital (the “principal”) when the bond matures and paying an agreed amount of interest (“coupons”) along the way.

A green bond is differentiated from a regular bond by being “labelled”, i.e., designated as “green” by the issuer or another entity, whereby a commitment is made to use the proceeds of green bonds (i.e., the principal) in a transparent manner, and exclusively to finance or refinance “green” projects, assets, or business activities with an environmental benefit.

Several different organizations – including Cicero, Climate Bonds Initiative, Sustainalytics, Moody’s and S&P – review and designate green bonds across industries and asset classes using various rating methodologies and criteria.

Green Bonds are commonly used to finance below types of projects:

Types of Green Bonds

The below table provides an overview of various types of Green Bond issuances for infrastructure sector globally.

Green bond issuance process has in built reporting and monitoring principles.

Benefits of Green Bonds

  • Green Bonds enhances issuer's reputation and showcases its commitment to sustainable development.

  • Typically have a lower interest rate than the loans offered by the commercial banks.

  • Investors are focusing more on green investments which in turn may help in reducing the cost of raising capital.

  • Investors can better support their investment strategies with additional information on issuers’ sustainability plans and increase their exposure to less volatile instruments

  • Crucial in increasing financing to sunrise sectors such as renewable energy, thereby contributing to sustainable growth.


Global Market of Green Bonds

The green bond finance market has reached its most substantial milestone yet, with around US $1 trillion in cumulative issuance since market inception in 2007.

Europe is leading issuance of green bonds with US $432.5bn in issuance, followed by North America with US $237.6bn. US $219.3bn has been issued in the Asia-Pacific region, placing it third. US $20.0bn has been issued in Latin America and the Caribbean (LAC), and US $3.5bn of green issuance is from Africa.

In regards with issuer type for green bonds, Corporates are the largest source of issuance at US $205.6bn, with Non-Financial Corporates next on US $205.0bn, followed then by Development Banks at US $158.8bn.

Government-Backed entities have contributed US $153.1bn and Local Government issuance accounts for US $63.9bn of the market size. Asset-Backed Securities (ABS) comprise US $116.2bn and Green Loans account for US $28.9bn of the market.


Green Bond in Southeast Asia

While advanced economies still dominate the global green and social finance landscape, Asian economies have been active players in this market. COVID-19 has further influenced investors in Asia regarding their approach to address environmental and climate change concerns.

Asia has been at the forefront in introducing regulations and policy guidance on green and social finance. A conducive regulatory and policy environment has contributed to the rapid growth of green and social finance in the region— growth that has continued since the COVID-19 outbreak. Strong growth is consistent with growing awareness in the Asian finance industry of the importance of green and inclusive recovery after COVID-19.

Below table highlights the development of green bonds in some of the countries of the region:

The financial systems of Asian countries have developed rapidly and now compare favorably with rest of the world, though still behind some advanced economies. Therefore, by further developing market infrastructure and ecosystems for sustainable finance and growth the finance industry through strong yet nimble regulation that safeguards financial stability while promoting investment and innovation, the region will enhance its ability to meet the huge financial requirements of green and inclusive recovery.


Case Study – Green Bonds in India

India is Second largest market for Green Bonds in Asia after China, Despite the innovations in the field since 2015, the Indian green bond market has not been able to diversify itself much in terms of assets, which remain focused on renewable energy projects.

Yes Bank became the first Indian bank to issue Green Infrastructure Bonds (GIBs) on the London Stock Exchange (LSE), worth Rs. 10 billion (US$ 160 million) to fund 5 GW of renewable energy projects. Since then, multiple renewable energy firms and banks have issued green bonds on various exchanges.

The illiquidity of the corporate bond’s markets and lack of expansion into other types of green bonds remains a bottleneck. Further, the market remains quite small, with a multiplicity of stakeholders, standards, and processes. At the same time there are a limited number of issuers, the cost of debt remains high, and green investments are still considered to be risky novelties.

A national strategy an on developing capital markets for sustainability would give fillip to green bonds, municipal bonds, green IPOs etc. It would allow for coordination among policymakers, regulators, institutional investors, and consumers, while spreading awareness, understanding, and availability of green investment options over brown alternatives. To do this, it should consider a hybrid model that weds the responsiveness of voluntary private regulatory regimes with the legitimacy of public regulation.



Green bonds are an effective financing mechanism that benefits both issuers and investors and can help mobilize private capital available in developed countries. Investors are increasingly taking environmental, social and governance factors into account along traditional financial risks.

Engaged public policy is central to nurturing green finance. Governments have a range of policy options available both to shape markets and to participate in them. Regulation that enforces common standards of information disclosure and impact measurement is the most powerful policy option. Policies that align finance with the SDGs, improve market infrastructure and ecosystems, and expand tax revenue for green finance will enable further development of Green Bonds.



YOG INFRA is an infrastructure focused financial advisory firm committed to support sustainable economic growth driven through infrastructure development. We have our offices in Singapore and India.

We work globally with Development Finance Institutions (DFIs), Private Sector and Government Agencies; and have a strong focus on Asia.

For more information about us, our service offerings and team, please visit Contact us at

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  • Climate Bonds Initiative Report: $1Trillion Mark Reached in Global Cumulative Green Issuance: Climate Bonds Data Intelligence Reports: Latest Figures Dated: Dec 2020

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