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Laxman Pai, Opalesque Asia:

Global institutional fixed-income investors around the world plan to increase allocations to ESG bonds in the next two years said a study.

The study from Coalition Greenwich said that more than 90% of the global fixed-income investors participating plan to expand allocations to ESG-labeled bonds. That result points to strong demand from the buy side for sustainability-linked and use-of-proceeds bonds like green bonds and social bonds.

"The fact that institutional investors are almost unanimous in their embrace of ESG-labeled bonds should provide a boost of confidence to the organizations and firms working to build out the infrastructure for sustainable investments," says Stephen Bruel, Senior Analyst at Coalition Greenwich Market Structure & Technology and author of The Continued Maturation of Fixed-Income ESG Investing.

However, even institutions planning to expand allocations to ESG-labeled bonds are not entirely convinced that the market today is fully ready to support the demand.

More than 60% of institutions participating in the study believe liquidity in ESG-labeled bonds sometimes falls short of what's needed, including a quarter of the investors who describe liquidity in these products as "insufficient."

"Although concerns about liquidity remain, the entrance of new investors and the maturation of the market structure should alleviate these worries over time," says Stephen Bruel, who notes that ESG-labeled bonds are hard......................

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