The International Finance Corporation (IFC), a member of the World Bank Group, and HSBC Asset Management (HSBC AM) have on Wednesday announced an agreement to establish a specialized fund vehicle targeting corporate bond issuers in emerging markets (EM), aiming to increase access to finance and support sustainable growth.
The fund will support the existing HSBC Global Emerging Market Corporate Sustainable Bond Strategy and invest in publicly listed bonds issued by corporate and financial institutions in emerging markets, IFC said in a statement.
It will be classified as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR) — its highest level of classification in terms of sustainability.
“By aligning with SFDR Article 9, which places a strong emphasis on issuer-level sustainability and transparency beyond just an issuance’s use-of-proceeds, the HSBC corporate bond strategy will support the growth of sustainable businesses and accelerate their green transition,
“IFC’s investment is expected to mobilize additional institutional investors and increase the pool of capital dedicated to sustainability-related transactions in emerging markets,” said Mohamed Gouled, Vice President of Industries, IFC.
According to the statement, the collaboration between IFC and HSBC AM aims to further drive sustainable growth and impact in emerging markets by investing in key areas such as sustainable technologies and social impact.
While emerging market countries comprise more than 80 percent of the world’s population1, they capture a much smaller share of global financing.
Significant investment is needed to advance and accelerate their transition to a sustainable future.
The HSBC Global Emerging Markets Corporate Sustainable Bond strategy seeks to make positive environmental, social and governance (ESG) change and measurable impact by investing in EM corporate bonds and related securities that contribute to the UN SDGs, as well as help bridge the financing gap for EM corporate issuers.
IFC will support the strategy with a proposed $100 million anchor investment in the fund.
“We are pleased to expand our partnership with IFC, which dates back to 2019 following the launch of HSBC Real Economy Green Investment Opportunity GEM Bond Fund (REGIO), as we reinforce our contribution to improved sustainability in emerging markets and help support our clients’ sustainable investment objectives,
“We hope this collaboration demonstrates the financial market opportunity in funding sustainability to help bridge the financing gap for EM corporate issuers whose activities are aligned with and positively contribute to the UN’s Sustainable Development Goals,” said Nicolas Moreau, Chief Executive Officer of HSBC Asset Management.
IFC’s support aims to help mobilize institutional investors given its extensive experience in EM investments, its leadership in the ESG and sustainability space, and its track record in establishing new asset classes.
In order to meet their Sustainable Development Goals (SDGs) and Paris Agreement commitments, emerging market countries require increased private finance.
This initiative aims to boost the effect of third-party capital in supporting SDG objectives in emerging market corporate bond investments.
IFC is the largest global development institution focused on the private sector in emerging markets.
The organization works in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries.
In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet.
HSBC AM is the investment management business of the HSBC Group, invests on behalf of HSBC’s worldwide customer base of retail and private clients, intermediaries, corporates and institutions through both segregated accounts and pooled funds.
The firm connects HSBC’s clients with investment opportunities around the world through an international network of offices in 22 countries and territories, delivering global capabilities with local market insight.
As at 30 June 2024, HSBC AM managed assets totaling $713 billion on behalf of its clients.
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