Abstract :

Sovereign bond performance is gaining traction in ASEAN countries, but there are challenges, such as high sovereign risk. This can happen for a number of reasons, such as economic downturns, political instability, or ineffective fiscal management. Investors may be less willing to invest in a country’s bonds if the country is perceived to have a high bond risk. By maintaining sustainable performance such as implementing ESG can be a solution for lowering risk and gaining investor interest in portfolio diversification. The aggregated ESG score and bond spread have a statistically significant relationship, according to the study’s findings, with a negative relationship of -0.112 and the component social indicator being the most powerful. With a significance of 0.033, the relationship between ESG score and bond yield spread becomes stronger over time. The author recommends that countries assess current ESG practices, establish ESG targets and goals, develop an implementation plan, engage stakeholders, monitor progress, and make necessary changes to reduce sovereign risk. This demonstrates a country’s commitment to ESG while also improving its performance, making it more appealing as an investment destination.

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Keywords :

ASEAN countries., bond yield spread, ESG Score, Sustainability performance

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