The Covid-19 pandemic created a lot of uncertainties and fear that it would decimate Asia's capital markets activity when it started to unravel in the early part of 2020. Issuance volume and fund-raising forays, as expected, were muted as issuers and borrowers shelved their financing plans and investors digested the impact of the global health crisis and addressed their mark-to-market losses. But the market eventually recovered and, in fact, ended the year in record-breaking fashion. Refinitiv figures show Asia G3 bond issuance in Asia, outside of Japan and Australasia, rose 6.6% to US$373.32 billion in 2020, compared with US$350.18 billion a year earlier. This was the highest annual volume since 2010. The increase bucked the slowdown in issuance activity in China – the largest G3 bond market in the region – where volume fell to US$177.58 billion from US$183.31 billion in 2019, due to the fewer number of deals printed during the year. What helped underpin the Asia G3 bond issuance in 2020 was the proliferation of green, social and sustainability bond transactions, which issuers, including the sovereigns, tapped to fund their Covid-19 relief efforts and attract environmental, social and governance (ESG) investors. Proceeds were usually earmarked to provide financial support to small and medium-sized enterprises (SMEs) and to small and home offices adversely impacted by the pandemic. Funds were also allocated to eligible social projects, such as affordable housing and infrastructure, and essential services. For green bond issuers, the proceeds were used to fund eligible green projects, including green buildings, energy efficient projects, pollution prevention and control, and sustainable water and wastewater management.

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