Citi Bank Sets Record for Asia Pacific Sustainable Financing

In the first half of 2021, Citi Bank has raised over US$25bn for Asia Pacific clients from global and local capital markets to support their sustainable financing needs. This is an increase of over 400% versus the same period for the bank in 2020 and the most for the bank for a half-year on record.

Highlight transactions in the first half include Alibaba Group's US$5bn four-part offering in February, which included a 20-year sustainability tranche — its debut sustainable capital markets transaction. From the hardware sector, SK hynix issued a US$2.5bn bond in January with a 10-year green tranche. Citi likewise led a US$3bn sukuk for the Republic of Indonesia in June, which included a 30-year green tranche — the longest-ever green offering in Islamic format.

"As a global, value-driven firm, we are dedicated to supporting the transition to a low-carbon economy. We view sustainable financing both as a mandate and as an opportunity to partner with our clients across geographies — to help them decarbonize their operations and achieve their enterprise sustainability goals," said Peter Babej, Citi Asia Pacific CEO.

Issuers in many cases can now raise cheaper financing via the issuance of green bonds.

Favorable pricing — or a 'greenium' — is evident among issuers of sustainable bonds as issuers monetize higher oversubscription levels for these transactions especially in busy or difficult markets.

This is a function of the demand increase.

The capital raised for Asian clients is part of Citi's overall global financing targets. In 2019, the bank met its $100 billion Environmental Finance goal four years early. In April 2021, the bank announced a US$500 billion environmental finance goal, as part of the US$1 trillion sustainable finance goal, all by 2030.

As the partnership with clients evolves, the dialogue though is widening further away from just financing.

"The scope of our sustainable financing efforts is growing continuously, and covers all client segments – from investors repositioning their portfolios toward greener industries, to corporates realigning their business models through acquisitions and divestitures. Our institutional commitment to building a greener future cuts across all these activities," added Babej.

For its own operations, Citi is targeting net zero emissions by 2030, which builds on it's environmental footprint goals and a 100% renewable electricity goal that the bank achieved in 2020.