Singapore Prepares to Issue First Sovereign Green Bonds

Framework sets out how government will issue and manage sovereign green bond issuances.

Singapore’s Ministry of Finance and the Monetary Authority of Singapore (MAS) have published a new governance framework for sovereign green bonds, announcing plans to issue the first such bonds in the “coming months”.

The Singapore Green Bond Framework sets out how the city-state will issue sovereign green bond issuances under the Significant Infrastructure Government Loan Act 2021 (SINGA).

It includes details on the government’s intended use of green bond proceeds, governance structure to evaluate and select eligible projects, operational approach to manage green bond proceeds, and commitment to post-issuance allocation and impact reporting.

The Green Singapore Government Securities (Infrastructure) bonds, or Singa bonds, will be used to finance “nationally significant infrastructure” that meets certain “green” criteria specified under the Framework. The infrastructure projects are expected to provide “long-term environmental benefits to both the current and future generations”.

The Framework’s release coincides with a Budget 2022 pledge by the government to issue up to S$35 billion (US$25.4 billion) in public sector green bonds by 2030, MAS says. The framework has been designed to ensure that the green bonds issued by public sector agencies adhere to market best practices, having been developed to align with ICMA’s Green Bond Principles 2021 and ACMF’s ASEAN Green Bond Standards 2018.

The Singapore government commits to stringent governance and oversight of project selection and allocation of proceeds, which will include annual post-issuance allocation reporting and impact reporting on environmental benefits and, where possible, social co-benefits of the Eligible Green Expenditures.

“This provides transparency and accountability for investors and other interested parties,” MAS says, adding that a Green Bond Steering Committee will be responsible for the overall governance and implementation of the Green Bond Framework.

Indranee Rajah, Singapore’s Second Minister for Finance, said the framework’s publication is another important step forward to deepen market liquidity for green bonds, attract green issuers, capital and investors, and catalyse sustainable financing in the region. “Our investments into the eligible green projects will facilitate Singapore’s transition to a low-carbon economy and advance the United Nations Sustainable Development Goals,” she said.

The proceeds from green bonds issued under the framework will be used to finance expenditures in eight categories: renewable energy; energy efficiency; green building; clean transportation; climate change adaptation; pollution prevention; control and circular economy; sustainable water and wastewater management; biodiversity conservation and sustainable management of natural resources and land use.

The Singa bonds will be issued and managed on behalf of the government by MAS, which will provide more information about the upcoming issuance closer to the issuance date.

DBS Bank was an adviser on the development of the Framework, which was reviewed by Morningstar Sustainalytics.

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