On April 2, local time, Bank of China assisted the Ministry of Finance of China in successfully issuing RMB 6 billion of green sovereign bonds in London, UK. The funds raised will be fully allocated to eligible green projects included in the central fiscal budget in accordance with the People’s Republic of China Sovereign Green Bond Framework (“Framework”).
In February this year, the Ministry of Finance formulated and issued the Framework to provide guidance for the issuance of Chinese green sovereign bonds overseas. As China’s most globalised Chinese bank, BOC leveraged its cross-border business expertise to assist the MOF in obtaining an independent second-party opinion on the Framework as a green structuring advisor, and served as the joint global coordinator for this bond issuance.
The issuance consists of two tranches with maturities of 3 years and 5 years, each sized at RMB 3 billion, with final coupons of 1.88 per cent and 1.93 per cent respectively. The strong engagement from investors contributed to the issuance’s success, with total order books reaching RMB 41.58 billion, 6.9 times oversubscribed. The trade attracted a diverse investor base, with sovereign and supranational investors accounting for 30%, banks for 48%, and insurance and asset management institutions for 20%. Geographically, 83.5% of investors were from the Asia-Pacific region, while 16.5% were from Europe and other financial centres. Additionally, the bonds garnered strong interest from green and sustainable investors, whose orders accounted for approximately 22% of the total book.
This issuance also marks the first green sovereign bond issued by the MOF following the release of the Framework and is a key initiative in implementing the outcomes of the 11th China-UK Economic and Financial Dialogue. It also adds a green component to China’s offshore multi-currency sovereign yield curve.
As the lead service bank for the MOF’s offshore multi-currency bond issuances, BOC continues to leverage its strengths to empower green and sustainable development through financial services, to contribute to the diversification of offshore sovereign bond offerings, and further supports RMB internationalisation. Additionally, the pricing call of the transaction was hosted at BOC London Branch, attended by Executive Vice President of BOC, Mr. Zhang Xiaodong, along with BOC London General Manager Mr. Fang Wenjian and Chief Markets Officer, Mr. Zhu Min.
