In December 2021, the Asian Development Bank and the Global Green Growth Institute conducted an online survey and received a total of nine responses from institutional investors and underwriters in the Lao People’s Democratic Republic (Lao PDR). Given the size and current stage of capital market development in the Lao PDR, the number of responses provides us with a good indication of the interest of local market participants. The survey was conducted to assess institutional investors’ interest in green bonds issued in the Lao PDR, as well as the perspectives of local underwriters on their clients’ interest in green bond issuance. The survey identified the market drivers, impediments, and development priorities to assist development partners in identifying potential areas of support to accelerate the development of the Lao PDR’s sustainable finance market. The most noteworthy survey findings are presented below: ff Almost 60% of institutional investors participating in the survey indicated that they are keen to explore possible investment opportunities in green bonds but lack the resources to do so. Similarly, approximately 80% of local underwriters have reported that their clients are interested in issuing green bonds but lack the necessary resources.

ff The lack of policy guidance from regulators and the absence of internal resources were cited as the primary obstacles preventing local investors from investing in green bonds. From the perspective of underwriters, the lack of resources to launch new products in the Lao PDR was cited as a major obstacle.

ff Both investors and underwriters agreed that the most promising sectors for growth in the Lao PDR’s green bond market are sustainable agriculture and renewable energy.

ff To attract investments, green bonds must provide a higher return than conventional bonds and allow investors to diversify their portfolios. Meanwhile, underwriters indicated that the opportunity to attract new investors would be the primary reason for issuing green bonds, followed by improved corporate disclosure and potentially lower funding costs.

ff Development banks can play a number of roles in accelerating growth in the green bond market.