On July 16, China Development Bank issued the first green bonds through the Bond Connect market scheme with a total value of 10 billion yuan to global investors under the theme of “ecological protection and high-quality development of the Yellow River Basin”. The issuance of the bonds is another major move of the bank to support the development of a green financial system and implement China’s key regional strategies in line with the guidance of the People’s Bank of China.
The issuance involves 7 billion yuan of fixed-rate bonds and 3 billion yuan of floating-rate bonds at a seven-day inter-bank depository-institutions repo rate (DR), with an issuance interest rate of 2.58% and 2.55% (benchmark rate + 46BP), respectively. The bonds comply with the requirements of the Green Bond Endorsed Project Catalogue by the People’s Bank of China, the Green Bond Principles by the International Capital Markets Association, and the Climate Bond Standard by the Climate Bond Initiative (CBI), and have been certified by two third-party institutions, CBI and Lianhe Equator. The funds raised will be provided as loans for green infrastructure upgrading and other related projects across nine provinces in the Yellow River Basin, which are expected to achieve an annual emission reduction of 20,100 tons of carbon dioxide, 34.99 tons of nitrogen oxides, 0.66 tons of inhalable particulate matter (PM10), and savings of 10,000 tons of standard coal.
The bonds, which are available for wholesale and retail in domestic and international markets at fixed and floating rates, have been issued simultaneously through the China Central Depository & Clearing Co., Ltd. The DR benchmark was applied to green bonds for the first time to attract more private capital to contribute to green and low-carbon development. The bonds were actively subscribed by investors such as Bank of China, Bohai Bank, Agricultural Bank of China, China Construction Bank, Pudong Development Bank. Compared with ordinary bonds, the green bonds attracted a broader subscriber base, which covers banks, brokerages, underwriters, funds, foreign institutions, among others. Bonds valued at 2 billion yuan were offered to the public through twelve trading institutions, including the Industrial and Commercial Bank of China, Agricultural Bank of China, and Pudong Development Bank, to raise public awareness of green responsibility. The bonds were also highly recognized by overseas investors such as sovereign wealth funds and international financial institutions, which made a combined subscription of over 3 billion yuan.
To date, China Development Bank has issued 80 billion yuan of green bonds in total. According to the person in charge of green bonds at the bank’s capital department, China Development Bank will resolutely implement the concept of new development, actively promote the role of development finance, continuously explore innovative bond products and mechanisms, and continue to support the development of a diversified green financial market.
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