Thailand has become the first country in Asia to issue a sovereign sustainability-linked bond (SLB), raising THB 30 billion (approximately USD 870 million) to advance its climate and environmental goals. Supported by the Global Green Growth Institute (GGGI), the 15-year bond targets institutional investors and ties financial incentives to two key performance indicators (KPIs) that reflect Thailand’s climate commitments.
The SLB aligns with two national climate objectives. The first goal is a 30% reduction in greenhouse gas emissions by 2030 compared to the business-as-usual scenario, consistent with Thailand’s unconditional Nationally Determined Contribution (NDC). The second objective seeks to increase annual registrations of zero-emission passenger cars and pick-up trucks to 440,000 vehicles, supporting the country’s 30@30 policy to promote electric vehicle adoption. The bond incorporates a financial incentive mechanism: failure to meet these targets will trigger a penalty through increased interest rates while achieving them will reduce interest rates.
“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,” said Patchara Anantasilpa, Director-General of PDMO.
Thailand’s issuance places it alongside Chile and Uruguay as one of the few countries globally to adopt sovereign sustainability-linked bonds. The bond also builds on Thailand’s growing sustainable bond market, which has so far been dominated by green bonds from private-sector issuers.
Helena McLeod, Acting Director-General of GGGI, 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 neighbouring nations to adopt sustainable finance tools and strengthen collaboration on achieving shared climate goals.”
GGGI has played a crucial role in facilitating Thailand’s transition to performance-based SLBs, providing technical support to the PDMO, bond arrangers, and relevant ministries. “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,” said Suchai Buranavalahok, GGGI Thailand Investment Lead. “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.”
This initiative was made possible through the Global Trust Fund (GTF) on Sustainable Finance Instrument, a programme launched in 2023 with support from the Grand Duchy of Luxembourg. The GTF aims to promote the adoption of sustainable financial instruments in developing countries, providing capital for environmental and developmental projects. By linking financial outcomes to sustainability goals, Thailand’s SLB highlights the potential of innovative financial tools in addressing climate challenges and advancing national climate targets.
