BNP Paribas Asset Management launches first sustainable thematic Asian fixed income fund

BNP Paribas Asset Management (‘BNPP AM’) announces the launch of the BNP Paribas Sustainable Asian Cities Bond fund, a Luxembourg-domiciled sustainable thematic fixed income fund offering investors exposure to a differentiated strategy that is both regional and thematic, aiming to capture the multi-decade growth opportunities offered by sustainable urbanisation in Asia.

  • This is the first Asia-focused fixed income strategy in the market classified as SFDR Article 9[1].
  • With a focus on Asia ex-Japan bonds, the fund capitalises on a geographic region that is experiencing strong growth in the issuance of sustainable-labelled bonds.
  • The fund contributes to the promotion of sustainable Asian cities to meet the challenges of increased urbanisation, impacts of physical climate change and inclusive growth.

The launch of BNP Paribas Sustainable Asian Cities Bond is part of the expansion of BNPP AM’s range of sustainable thematic solutions, with a two-pronged approach to the selection of portfolio holdings:

  1. Sustainable labelled bonds where the potential use of proceeds is naturally aligned with aspects of sustainable cities (e.g. clean transport, renewable energy or healthcare infrastructure), leveraging BNPP AM’s proprietary approach to assessing thematic bonds.
  2. Bonds from issuers involved in activities that contribute to aspects of sustainable cities – screening issuers who derive a minimum of 20% of their revenue from activities that are directly contributing to sustainable Asian cities (such as smart grid technology products) or are enablers of them (such as real estate developers); both are subject to filtering for sound ESG[2] practices.

The actively-managed, thematic approach showcases BNPP AM’s strong credentials in sustainable investing and capabilities within emerging market fixed income to deliver long term sustainable returns to investors.

Jean-Charles Sambor, Head of Emerging Market Fixed Income at BNPP AM and Portfolio Manager of the BNP Paribas Sustainable Asian Cities fund, comments:

“The BNP Paribas Sustainable Asian Cities fund is a continuation of BNPP AM’s success within sustainable thematic solutions and the launch is in response to client demand.  We believe that the need for infrastructure development capital in Asia to make cities more sustainable is secular and long-term, taking place over several decades, rather than being a passing fad.  Our actively-managed thematic approach enables us to build a dynamic fixed income portfolio based on a two-pronged approach that will allow us to generate consistent returns relative to broader Asian bond markets.  This in turn allows us to meet the expectations of our clients who are looking to generate a positive impact on tomorrow’s society while generating long-term value.”

Xuan Sheng Ou Yong, Green Bonds and ESG Analyst at BNPP AM, adds:

“This is a focused and relevant theme to the future of Asia.  The region already accounts for more than half of the world’s population, and will likely experience increased urbanisation in the decades to come.  Coupled with expected higher frequency and intensity of physical climate change impacts, we see great urgency for Asian cities to undergo sustainable change.  The regulatory environment is also moving towards requiring better sustainability disclosure requirements to facilitate capital flows towards issuers with better sustainability practices.  Nonetheless, more effort is needed and can be done to prepare Asian cities for the future.  We believe this strategy can contribute to this effort while delivering long term sustainable returns to investors.”

Key fund characteristics

Name BNP Paribas Sustainable Asian Cities Bond
Legal structure Luxembourg SICAV
Management company BNP Paribas Asset Management Luxembourg
Delegated management company BNP Paribas Asset Management UK Ltd
Custodian                                               BNP Paribas Securities Services – Luxembourg branch
Launch date 6 May 2022
Base currency USD
ISIN code Classic Capitalisation – LU0823379622
Registered for sale in ASIA: Hong Kong, Korea, Macau, Singapore, Taiwan
EUROPE: Austria, Belgium, Czech Republic, Denmark, Finland,
France, Germany, Ireland, Italy, Luxembourg, Netherlands,
Poland, Portugal, Slovakia, Sweden, Spain, Switzerland, UK
Benchmark                                            JP Morgan Asia Credit Index (JACI)

Footnotes

  1. ^ [1] (b) Sustainable Finance Disclosure Regulation 2019/2088 of the European Parliament and of the Council of 27 November 2019 on information to be provided on sustainable development in the financial services sector. Article 9 – product with a sustainable investment objective.
  2. ^ [2] Environmental, Social and Governance criteria

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