‘Blue bonds’ are primed to join green financing in Asia to raise funds towards the protection of oceans and marine life

Few places in the world have greater need for a new type of sustainable debt to fund water projects and protect the oceans than Asia, with its more than 100,000 kilometres of coastline.

While so-called “blue bonds” are relatively rare, that’s about to change as more Asia-Pacific nations set their sights on improving the sustainability of water resources and marine life, according to BNP Paribas Asset Management.

“I’d expect to see more focus on ecosystem restoration and preservation, which could result in more sustainability bond issuance focusing on the blue economy, water and waste,” according to Gabriel Wilson-Otto, global head of sustainability research at BNP Paribas in Hong Kong.

While the Seychelles sold the world’s first sovereign blue bond in 2018, just a handful of borrowers have followed suit, led by Asia. A China issuer completed the first dual-currency blue deal in the offshore market in September, the first of its kind in the region.

Bank of China’s Paris and Macau branches issued a US$500 million three-year note and a 3 billion yuan (US$464 million) two-year note to help finance marine-related projects. Two months later, Industrial Bank’s Hong Kong branch sold a similar US$450 million bond.

Australia may join the blue list. Pollination Group, a climate change advisory and investment firm, is working with private issuers including banks to launch a corporate blue bond with proceeds funding ocean-based biodiversity projects, according to Martijn Wilder, a co-founding partner at the firm. These could produce “blue carbon credits” which can be sold to the Australian government’s carbon-offset programme, he said.