Vietnam’s first local currency sustainability-linked bonds aim to boost economy

The International Finance Corporation (IFC) is investing around $150 million in local currency sustainability-linked bonds (SLBs) to be issued by BIM Land JSC and its subsidiary Thanh Xuan JSC.

As the first local currency SLBs in Vietnam, they aim to help issuers expand their businesses while creating jobs, boosting competitiveness, and supporting the country’s low-carbon growth model.

IFC’s investment comprises two elements, with about $100 million to be issued by BIM Land – a tourism and property developer in Vietnam – and approximately $50 million to be issued by Thanh Xuan JSC. Both the issuers are subsidiaries of BIM Group, a multi-sector corporation in Vietnam.

The proceeds will be used to develop the Thanh Xuan Valley project in Vinh Phuc province, including an eco-friendly and unique residential community alongside a hotel complex (under the InterContinental brand), as well as other relevant services and infrastructure.

IFC’s funding will also help the developers implement water- and energy-saving solutions at two BIM Land hotels – InterContinental and Regent – on Phu Quoc island.

An innovative financing tool to support global sustainable development, these SLBs will provide financial incentives for both BIM Land and Thanh Xuan JSC to improve water conservation and energy efficiency in three of their hospitality assets that hope to be accredited by EDGE – IFC’s green building certification system.

This is expected to avoid an estimated 4,000 metric tonnes of CO2 annually – equivalent to greenhouse gas emissions from 890 gasoline-powered passenger vehicles driven for a year.

Doan Quoc Huy, BIM Group’s vice chairman and CEO said, “Sustainability is a critical part of our strategy to position BIM Land as a leading property developer and operator in Asia with a long-term vision. We hope to attract international investors as we develop high-quality, green tourism infrastructure across the country.”

“Most importantly, IFC’s financing and advice will help catalyse our green transition in line with the industry’s best practices and global climate goals,” he added.

IFC has also helped BIM Land develop its sustainability-linked financing framework with tailor-made performance targets.

Thomas Jacobs, IFC country manager for Vietnam, Cambodia, and Laos stated, “Private capital is key to Vietnam’s green transition. The issuance of the first local currency SLBs in the country will signal the viability of innovative green financing instruments as an alternative source of capital for climate-smart projects.”

“IFC’s funding will also encourage developers to align their interests with responsible investment and to mobilise funding from green capital markets, paving the way for the sustainable tourism sector,” Jacobs continued.

In line with the government’s twin goals of becoming a high-income country by 2045 and achieving net-zero by 2050, climate and sustainability have become stronger focus areas for the IFC engagements in Vietnam.

To date, IFC has allocated over $900 million in long-term finance to support climate-related projects in the country. IFC’s commitments in Vietnam reached close to $1.9 billion in fiscal year 2023, helping local companies recover and navigate the challenging environment.

Vietnam Investment Review