BANGKOK, THAILAND NOVEMBER 27, 2024 – The Public Debt Management Office (PDMO) under Thailand’s Ministry of Finance has issued its first sovereign sustainability-linked bond (SLB), with the technical support of the Global Green Growth Institute (GGGI), particularly in identifying and validating the SLB’s key performance indicators (KPIs) and sustainability performance targets (SPTs). The transaction, targeting institutional investors, amounted to THB 30 billion (approximately USD 870 million) in local Thai Baht currency.

Thailand has become the first country in Asia, and the third globally after Chile and Uruguay, to issue this innovative financial instrument aimed at improving climate and environmental goals.

With a maturity of 15 years, the SLB is tied to two national climate targets: reducing greenhouse gas emissions by 30% by 2030 (compared to the business-as-usual scenario), in alignment with the country’s unconditional Nationally Determined Contribution (NDC) target; and increasing the annual registration of zero-emission passenger cars and pick-up trucks to 440,000 vehicles, in line with Thailand’s 30@30 policy, which aims to expedite the adoption of electric vehicles by at least 30% by 2030. If Thailand fails to meet the targets, the SLB interest rate will increase as a penalty. Conversely, achieving the targets will result in a reduction in the interest rate.

 DNV (Thailand) Company Limited served as the second opinion provider for the bond.

Patchara Anantasilpa, PDMO Director-General, said, “This issuance reflects Thailand’s firm commitment to sustainability and climate action. By linking financial incentives to key performance indicators related to sustainability, the SLB strengthens our ability to achieve national climate targets while fostering sustainable financing practices.”

 Thailand’s sustainable bond market has expanded in recent years, with green bonds being the most common, mostly issued by private corporations. Until now, all SLB issuers in Thailand have come from the private sector.

Helena McLeod, GGGI Acting Director-General, said, “This is a landmark achievement, setting the stage for other countries in Asia and beyond to consider similar instruments. We hope this issuance will inspire neighboring nations to adopt sustainable finance tools and strengthen collaboration on achieving shared climate goals.”

Suchai Buranavalahok, GGGI Thailand Investment Lead, remarked, “Since early 2024, GGGI has provided essential technical support to the PDMO, bond arrangers, and relevant ministries, assisting them with navigating the complexities of transitioning from issuing use-of-proceeds sustainability bonds to performance-based SLBs.”

“GGGI’s support includes facilitating accurate baseline and target setting for the SLB to ensure the KPIs and SPTs reflect Thailand’s commitment to sustainability targets, policies, and priorities. Post-issuance, GGGI will continue to support PDMO in the preparation of the first annual SLB progress report and the independent review by a third-party verifier to set the standard for reporting,” he added.

Thailand’s SLB issuance was enabled through support from the Global Trust Fund (GTF) on Sustainable Finance Instrument — a four-year program initiated in 2023 with assistance from the Grand Duchy of Luxembourg. The program aims to accelerate the adoption of sustainable financial instruments, including thematic bonds and debt-for-nature swaps, in developing countries. Through collaboration with local financial institutions and policymakers, the GTF on Sustainable Finance Instrument seeks to increase the availability of capital for projects that promote environmental protection and development.

Since 2014, GGGI has worked with the Thai government and other stakeholders to promote green growth, supporting efforts to reduce carbon emissions and create green jobs through initiatives in waste management, green buildings, green industry, and climate action.

 About PDMO

The Public Debt Management Office (PDMO) is a specialized entity under the Ministry of Finance. The PDMO is responsible for managing the government’s debt, including the issuance of various types of instruments to finance public projects, managing public debt, and supporting the country’s fiscal policies.

About the GTF

Created in 2023 with the support of the Government of the Grand Duchy of Luxemburg, the GTF aims to close the development financing gap by leveraging the capital market’s potential to promote climate change mitigation and adaptation by setting in place policy incentives and de-risking measures to direct bond proceeds towards low carbon resilient projects and initiatives. With GTF’s support, GGGI provides technical assistance that aims to strengthen the national green finance ecosystem of a minimum of 10 developing countries through the development of policy frameworks across six countries and training 400 private and public sector sustainable finance experts. GGGI will deliver pre- and post-issuance and credit enhancement support to up to 15 potential issuers, leading to an expected 10 thematic bond issuances raising USD 2 billion earmarked to NDC targets. The program’s direct capital mobilization will contribute to the avoidance of 130MtCO2 emissions, enhance the climate change resilience of 2 million people, and support the creation of 400,000 green jobs. Luxembourg Stock Exchange (LuxSE) is one of the strategic implementing partners of the GTF.

 About the Global Green Growth Institute (GGGI)

The Global Green Growth Institute (GGGI) was founded as a treaty-based international, inter-governmental organization in 2012 at the United Nations Conference on Sustainable Development. GGGI supports its Member States in transitioning their economies toward a green growth model that simultaneously achieves poverty reduction, social inclusion, environmental sustainability, and economic growth. With 48 Member States and 28 Partner countries and regional integration organizations in the process of accession, GGGI delivers programs and projects in over 51 countries. These initiatives encompass developing innovative green growth solutions, technical support, capacity building, policy planning & implementation, and assistance in building a pipeline of bankable green investment projects, project financing, investments, and knowledge sharing. GGGI’s work contributes to its Member States’ efforts to fulfill the Sustainable Development Goals and the Nationally Determined Contributions to the Paris Agreement.