The Public Debt Management Office (PDMO) plans to issue a sustainability-linked bond (SLB) worth 100 billion baht next year to offset the government's budget deficit.
According to Jindarat Viriyataveekul, public debt advisor for the PDMO, the planned SLB issuance will be used to cover the fiscal 2025 budget deficit, which is capped at 865 billion baht.
The issuance will require establishing conditions such as key performance indicators (KPIs) and sustainability performance targets (SPTs).
In November, the office issued an SLB worth 30 billion baht with an interest rate of 2.7%, which was lapped up by institutional investors.
For the November bond, Mrs Jindarat said the KPIs and SPTs focused on two key areas: limiting greenhouse gas emissions (excluding land use and forestry) to no more than 388,500 kilotonnes of CO2 equivalent by 2030, akin to a 30% reduction from the business as usual baseline; and achieving registration of at least 440,000 new zero-emission vehicles in the passenger car and pickup categories by 2030.
For the new SLB issuance next year, the PDMO is studying which KPIs and SPTs to use as conditions for the issuance.
The office plans to select from the 17 UN Sustainable Development Goals (SDGs) to establish the KPIs and SPTs, which is a significant challenge for the PDMO, she said.
The SDGs established by the UN are a set of global development targets adopted by 193 UN member states on Sept 25, 2015. These goals outline a 15-year framework for development that all countries are expected to collaboratively pursue from 2016 to 2030.
The SDGs consist of 17 main goals, with each goal including smaller objectives called targets, with targets totalling 169.
There are also 232 developed indicators to monitor the progress of these targets, such as zero poverty, zero hunger, good health and well-being, quality education and gender equality.
SLBs differ slightly from sustainable bonds. SLBs are tied to national sustainability targets, such as increasing the number of electric vehicles or reducing greenhouse gas emissions in line with international agreements.
In contrast, sustainable bonds are issued specifically to fund particular projects that promote sustainability.