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SINGAPORE: Singapore’s plan to fund infrastructure projects with green bonds is set to “spur” the private sector into action, paving the way for a steady supply and demand for green financing, industry experts told CNA.

Deputy Prime Minister Heng Swee Keat announced in his Budget speech on Tuesday (Feb 16) that the Government will issue green bonds on select public infrastructure projects, with up to S$19 billion of public sector green projects already identified. 

“Sustainability efforts require capital. Green finances will be an important enabler,” said Mr Heng, who is also Finance Minister. 

“The issuance of green bonds by the Government will build on these efforts by deepening market liquidity for green bonds, attracting green issuers, capital, and investors, and anchoring Singapore as a green finance hub.”

A green bond is a type of financial instrument designed to have environmental or climate-related benefits. They allow companies to integrate their sustainability strategies with their capital structure, analysts told CNA. 

Investors are also looking for more transparency in sustainable and green practices from companies they invest in and may avoid investments in non-green projects, which would impact such companies over time, said OCBC’s head of debt capital markets Kenneth Yeoh.

READ: Demand for green bonds expected to continue despite COVID-19 setback


“There is no doubt that there is increasing interest amongst Singapore businesses in green bonds; the sector has been evolving rapidly though, with investors increasingly focused in this area,” said Mr Sean Henderson, co-head of debt capital markets Asia Pacific at HSBC.

“We believe the Singapore Government’s leadership on green bond issuance will benefit private businesses, spurring them into action,” he added.

This is because sovereign issuers are “generally best in practice”, and will pave the way for both private issuers and investors to become well-acquainted with green financing practices, he said.

Bonds issued by the Government will also encourage the development of the external reviewer market, requiring reviewing agencies to invest in expertise and grow in size. This will in turn drive down the cost and increase access for private companies to review their potential green projects, said Mr Henderson. 

In his Budget speech, Mr Heng said the Government’s issuance of green bonds for selected public sector projects will serve as a reference for the Singapore dollar corporate green bond market, including the standards and framework applied, as well as the yields achieved.

Following his statement, OCBC’s Mr Yeoh said that the “significant public sector support” displayed by the Government is also expected to accelerate the adoption of green bond frameworks and standards, and make green bond issuances more mainstream.

“The increase in sustainability-related language used within bond documentation can help set the new industry standard, and ease companies into issuing more green bonds where possible by increasing market liquidity and consequently driving investor demand,” he said.

READ: Budget 2021: Government to issue green bonds to help enable sustainability efforts

DBS global head of fixed income Clifford Lee added that the issuance of such bonds by the Singapore Government is “well-placed” to meet growing demand from local and international investors.

“This paves the way for a steady supply of green bonds to be issued out of Singapore, generating more secondary market activity, deepening and broadening our capital markets,” he added. 

In terms of pricing, the Government-issued green infrastructure bonds are expected to be priced at a premium over Singapore Government Securities bonds, due to their novelty in the market, said Mr Lee. 


During his Budget speech, Mr Heng said that one of the green projects to be financed with green bonds is Tuas Nexus. The project will be Singapore’s first integrated waste and water treatment facility and is set to be completed in phases from 2025.

In the private sector, City Developments Limited in April 2017 issued a green bond to raise S$100 million, in what it said was the first such issuance by a Singapore company.

The proceeds raised were allocated towards various initiatives to enhance energy and water efficiency at Republic Plaza. 

“CDL issued the green bond amidst increased interest in responsible investment and a growing demand for relevant products,” said a company spokesman in response to CNA queries. 

“CDL’s inaugural green bond which was also the first by a Singapore company, links our sustainability initiatives with the capital markets and enables us to tap on investors who are supportive of the commitment that CDL has made towards sustainability best practices.” 

The National University of Singapore (NUS) issued its inaugural green bond in May last year, raising S$300 million. 

The funds were used to build the new SDE4 building, the first net-zero energy building in Singapore to be built from scratch. The building is among the first recipients for the Green Mark Platinum (Zero Energy) award, and is equipped with a hybrid cooling system and rooftop solar panels. 

“The green bond helps to open up access to green financing, which is increasingly relevant and critical as lenders become more conscious about sustainability,” said Mr Tan Kian Woo, the university’s senior vice president and chief financial officer. 

READ: MAS debuts grant scheme to support green and sustainability-linked loans

Companies in Singapore have shown increasing interest in issuing green bonds, said the analysts, adding that they are confident in the importance of this market. 

According to the ASEAN Green Finance Report, the issuance of green bonds across ASEAN almost doubled from US$4.1 billion in 2018 to US$7.8 billion in 2019. 

In 2019, Singapore contributed to 55 per cent of the ASEAN green debt issuance, up from 29 per cent in 2018, the same report showed. 

OCBC has seen an increase in the number of enquiries regarding the issuance of green and sustainability-linked bonds since 2019, and expects to see more Singapore companies issuing green bonds, said Mr Yeoh.

There were three Singapore dollar green bond issuances in 2020 – two by Ascendas REIT and one by NUS – totalling S$700 million, he added. 

OCBC supported both of the green bonds issued by Ascendas REIT last year. It was the sold lead manager, bookrunner and green finance advisor for Ascendas REIT’s S$100 million 10-year notes and S$300 million subordinated perpetual securities in August and September. 

DBS’ Mr Lee said the bank underwrote S$5.3 billion worth of green bonds in 2020, an increase of about 30 per cent from the previous year.

The proceeds raised were for projects across the renewable energy, green building development, clean transportation and wastewater treatment sectors across the region.

READ: Shades of green: Banks take bigger steps toward greener finance amid climate change push


According to analysts, the green bond market here has been dominated by real estate issuers.

But following the launch of the Singapore Green Plan 2030, statutory boards, as well as companies from the transport, waste and water management sectors are expected to also become predominant users of green finance, said Mr Henderson. 

The Singaporean market for green bonds is “at an exciting stage” and there is demand from investors as well as government and private issuers, said Dr David Broadstock, a senior research fellow and lead energy economist at the NUS Energy Studies Institute.

“Yet placing the optimism aside, Singapore’s existing market for green bonds is young, with considerable room for growth,” he added. 

Adding that Singapore is in the middle of a “truly exceptional” period of economic activity, he said that Singapore will ultimately be defined by its resilience towards growing green finance in the face of economic adversity stemming from the COVID-19 pandemic.

“The recognition by the DPM within the Budget speech is that Singapore is wanting to pursue a sustainable economic growth recovery as it emerges from the global pandemic which defined 2020, is testament alone that green bonds are a non-ignorable component of the menu of financial instruments available in Singapore, now and moving forward,” he said.

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