On November 9, CDB successfully issued first batch of quasi-sovereign green bonds, including USD 500 million in 5-year USD-denominated bonds and 1 billion euro in 4-year euro-denominated bonds. They are planned to be launched into market at the Hong Kong Stock Exchange (HKSE) and China Europe International Exchange (CEINEX). The raised funds will be mainly used to support projects in clean transportation, renewable energy and water resources protection related to the construction of the Belt and Road. This issuance was based on single debt rating, with the two types of bonds both getting a negative premium and ultra-high subscription, establishing a new model for the development of the international green bond market.
It was certified based on ISAE 3000 by Ernst & Young, which will also issue annual reports on the purposes and environmental benefits of the raised funds. Calyon Oriental and Deutsche Bank will serve as co-consultants. The leading banks and recording banks for the USD-denominated bonds are Agricultural Bank of China Limited Hong Kong Branch, Bank of China Hong Kong, BNP Paribas, China Construction Bank (Asia), Commonwealth Bank of Australia, Calyon Oriental, Deutsche Bank and Standard Chartered Bank. The leading banks and recording banks for the euro-denominated bonds are Bank of Communications, China Construction Bank (Europe) Limited, Commerzbank, Calyon Oriental, Deutsche Bank, HSBC, ANZ Bank of the Netherlands and Nordic Anstalt Bank of Sweden.
It is reported that the first batch of the green bonds features many highlights. Firstly, the interest rates are lower than those of ordinary bonds in the secondary market. The nominal interest rates for the 5-year USD-denominated bonds and the 4-year euro-denominated bonds are 2.75% and 0.375% respectively, getting a negative premium for the debut issuance. This reflects CDB’s active exploration into the cost advantages of green financing, thus establishing a new pricing benchmark for green bond issuance by Chinese-funded institutions. Secondly, the bonds have attracted broad attention from the global capital market. This issuance featured for the first time overseas road shows, online road shows and investor telephone conferences to enable an all-dimensional promotion. More than 200 institutional investors joined the subscription, with 70% of the subscriptions from outside Asia. Many of the investors are professional investors in the green industry, foreign central banks and sovereign wealth funds, showing that China’s sovereign credit and CDB have been widely recognized by international investors. Thirdly, CDB has implemented the highest international standards for green bonds. The bonds are strictly in line with the Green Bond Principles (GBP) and has been granted the Climate Bond Symbol by the Climate Bonds Initiative (CBI), making them more accepted by international investors.
According to a CDB spokesman, the successful issuance of the first batch of international green bonds, as an innovation by CDB in the international capital market, reflects that CDB is actively supporting the construction of the Belt and Road and promoting the interconnection of domestic and overseas bond markets by leveraging the advantages of CDB’s integrated financial services in investment, loans, bonds, leasing and securities and implementing a green development concept.
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