S&P Global Revelation: How Sustainability-Linked Debt Has Become A New Asset Class
S&P Global Revelation: How Sustainability-Linked Debt Has Become A New Asset Class

According to a report published on Friday by S&P Global Rating, it reads the issuance of sustainability-linked debt instruments will top USD 200 billion dollars this year due to rapidly increasing sustainability-linked loan market and growing popularity of sustainability-linked bonds,

It said the pool of companies that can obtain sustainable financing is expanding quickly to include issuers who may not have sufficient capital expenditures directly related to sustainability projects, are just beginning their sustainability journeys, or are in transition and hard-to-abate sectors

in addition, banks are bolstering growth of the sustainability-linked instrument market as they address corporate objectives to increase the share of impact financing within their lending books.

S&P Global went on saying – “The sustainability-linked concept will likely expand beyond the classic sustainability-linked loan or sustainability-linked bond structures into other instrument types including the newly developed sustainability-linked green bond that combines use of proceeds and sustainability-linked bond models."

The need for transparency and effective sustainability-related disclosure practices to avoid 'ESG-washing' is crucial to expanding the practice of linking loan and bond pricing to environmental, social, and governance (ESG) performance, the report said.

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