BPAM Launches Malaysia’s First ESG Bond Index Series

The Series currently monitors a total of 111 bonds from 9 issuers with the total market capitalization of RM 4.05 billion as of June 2019.

Bond Pricing Agency Malaysia (BPAM), a registered bond pricing agency accredited by Securities Commission of Malaysia, announced Malaysia’s first Environmental, Social and Governance (ESG) Bond Index Series.

The BPAM ESG Bond Index Series covers Malaysia Ringgit denominated, long term conventional and Islamic bonds (sukuk), classified within the Environmental, Social and Governance (ESG) principles.

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Mr. Meor Amri Meor Ayob CEO and Ms. Noor Bazlina Sharifmuddin Head of Financial Engineering and Research Bond Pricing Agency Malaysia.

“BPAM ESG Bond Index Series aims to be the first point of reference for ESG investments in the fixed income segment. The index series highlights bond issuers issuing under ESG principles, and tracks their performance. The index series could be used as benchmark, to compare its returns with other investments, ESG themed or otherwise; and in the future could be the base of index funds,” explained Mr. Meor Amri Meor Ayob, Chief Executive Officer (CEO) of BPAM.

BPAM ESG Bond Index Series is backfilled from January 2018 and monitors a total of 111 bonds from 9 issuers with the total market capitalization of RM 4.05 billion as of June 2019. The BPAM ESG Bond Index Series consists of bonds that were issued under or aligned with Securities Commission Malaysia’s (SC) Sustainable and Responsible Investment (SRI) Sukuk framework, ASEAN Green Bond Standard, ASEAN Social Bond Standard, ASEAN Sustainability Bond Standard and United Nation (UN) Sustainable Development Goals (SDG). Index calculation uses BPAM’s evaluated mid prices.

“The index series has the potential to introduce ESG bonds to a wider audience who have been looking for sustainable investment options. The index series also highlights the issuance principles related to ESG themes for more issuers to participate in the market,” shared Ms. Noor Bazlina Sharifmuddin, Head of Financial Engineering and Research of BPAM.

ESG investments are not a profit driven market. The awareness of the implicit value-proposition of socially responsible investing (SRI) is still at its early stage in Malaysia compared to more mature markets that trade these bonds.

“We are far from our full capacity in ESG-related investments. The launch of the ESG Index Series by BPAM as a benchmark for SRI, will hopefully improve SRI awareness and support the Government’s initiatives amongst local fixed income investors to support these bonds in the long run,” concluded Mr. Meor.

The BPAM ESG Bond Index is available to all BPAM subscribers via BPAM’s data dissemination service Bondstream.

This article was published based on press release issued by  Market Development Department of Bond Pricing Agency

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