SHANGHAI: China has raised six billion yuan or about US$826mil in its first-ever green sovereign bond sale, highlighting the country’s ambitions to bolster its environmental credentials to investors.
With more than 47 billion yuan of investor bids, the three-year and five-year offshore yuan-denominated notes were priced at 1.88% and 1.93%, respectively, according to a person familiar with the matter.
The yields were tightened from around 2.3% and 2.35% at initial price discussions.
The green securities will be listed in Hong Kong and an application will be made to the London Stock Exchange so that they could be traded there, the person added. The arrangement underscores China’s efforts to build closer financial ties with Britain and the nation’s intentions of tapping the world’s largest buyers of sustainable debt – European investors.
The coupon rates are about one and two basis points lower than the bid yields to maturity on the non-green yuan sovereign notes that were sold in Hong Kong in February, according to Bloomberg data.
The issuance allowed investors to directly engage with China’s Finance Ministry “to talk about its plans, the state of economy, its decarbonisation strategy”, said Xuan Sheng Ou Yong, sustainable fixed-income lead for Asia-Pacific at BNP Paribas Asset Management in Singapore. “Even the opportunity to have a meeting, that’s unprecedented.”
The debt issuance plan was first made public in January, when the British Chancellor of the Exchequer visited Beijing and both countries pledged to enhance financial cooperation and boost capital market partnerships.
It also comes as China ramps up offerings in overseas markets, including a US$2bil bond sale in Saudi Arabia in November and a 2bil deal in Paris last September. — Bloomberg
