Thailand Completes First Sustainability-Linked Bond, Raising $865 Million for Climate Goals

The government of Thailand has announced the successful completion of its first Sustainability-Linked Bond (SLB), raising 30 billion baht (USD $865 million) to support the country’s climate and energy transition initiatives. The new 15-year bonds feature interest rates tied to Thailand’s progress towards its climate targets, reflecting a significant step in aligning national financing strategies with sustainability objectives.

Demand for the bonds was strong, leading the Public Debt Management Office (PMDO) to increase the offering from 20 billion baht to 30 billion baht after it was oversubscribed by 2.8 times. According to PMDO, this offering represents the first government-issued SLB in Asia and only the third globally, marking a notable milestone for the sustainable finance market in the region.

The issuance of Thailand’s SLB comes at a time when the global market for these bonds is facing scrutiny over the credibility and robustness of linked sustainability targets. After rapid growth earlier in the decade, SLB issuance has slowed, with global issuances falling to $8 billion in Q2 2024 from a peak of $90 billion annually in 2021, according to Moody’s.

Thailand’s SLB terms are linked to two key sustainability performance targets: reducing the country’s total greenhouse gas emissions by 30% by 2030 from “business-as-usual” values, and increasing the annual registrations of zero-emission passenger vehicles to 440,000 by 2030. These ambitious targets are designed to ensure that Thailand’s green transition aligns with both national and international climate commitments.

Looking forward, the PMDO has outlined plans to issue a larger sustainability-linked bond of 130 billion baht (USD $3.9 billion) in 2025, further demonstrating Thailand’s commitment to financing sustainable development through innovative financial instruments.