Korea Climate Bond Market Overview and Opportunities
The Climate Bonds Initiative just released its first report exploring Korea’s green bond market and prospects for development. The report was commissioned by SK Securities and contains a host of recommendations to lever the potential in South Korea’s existing bond market - one of the largest in the world.
Korea Export-Import Bank (KEXIM) was the first issuer to come to market in 2013 and the only repeat issuer to date, accounting for 46% of total issuance. 2017 has seen two new issuers: Korea Development Bank and Hanjin International, signalling increased engagement within Korea’s governmental institutions and corporations.
Korea’s green bond market is still small compared to the global context, with only six green bonds coming from four issuers and totalling USD2.05bn to date. However, when analysing the Asia-Pacific region, Korea is the fifth largest cumulative issuer after China (USD47.7bn), India (USD6.6bn), Japan (USD6.1bn) and Australia (USD4.6bn).
Korea’s overall bond market size, financial system stability and strong industrial economy, issuance from key state-backed institutions, strong climate commitments and a large local investment market are hallmark factors that make Korea a prime candidate to lead new regional and global growth in green and climate bond issuance.
In order for the market to reach its full potential, actions can be taken by government and regulators as well as investors.