Interest on green bonds is gradually picking up in Asia underpinned by the rising awareness in sustainable investing and need to fund renewable energy projects.

Xinjiang Goldwind Science and Technology Company on July 16 priced China’s first green bond offering amounting to US$300 million, paving the way for other Chinese entities to tap this market to finance projects with environmental benefits.

The three-year deal was priced at 99.562% with a coupon of 2.50% to offer a yield of 2.652%. This was equivalent to a spread of 160bp over the US treasuries, or at the tight end of the final price guidance of 165bp area (+/- 5bp) and 20bp inside the initial guidance of 180bp area. The bonds performed in the secondary market and were trading at 99.70% and were quoted on a spread basis at 155bp to 160bp range about two weeks after the pricing.

In marketing the bonds, Xinjiang Goldwind held a roadshow in Hong Kong and Singapore. The company and the deal arrangers approached DNV GL, an international certification organization to validate its credentials. DNV GL provided a positive assessment based on the green bond principles and certified Xinjiang Goldwind as a pure play green company, which means that over 90% of its revenue is being generated from clean energy business.

Xinjiang Goldwind is a leading manufacturer of wind turbine generators and provider of wind power solutions in the world. The company almost exclusively generates its revenue from the clean energy sector and its business is focused on sustainable energy. “From that perspective, the company is one of the good candidates to launch China’s first green bonds,” says Andy Liu, head of debt capital markets for China at Societe Generale CIB, which acted as a joint global coordinator, bookrunner and lead manager for the transaction

The bonds are unrated and credit enhanced through a standby letter of credit (SBLC). “While Xinjiang Goldwind has a domestic rating, it would take some time for the company to secure an international rating,” says Liu. “Since it was looking to catch an ideal issuance window, it decided to launch the deal supported by SBLC, which is a well-known structure to offshore debt investors. It is an easier and faster way for them to tap the market.”

The offering attracted an order book of US$1.4 million from 67 accounts, giving the company the opportunity to print a larger deal than US$300 million, which it chose not to. “The company is pretty cash rich and there is no immediate need for the fund raising,” says Liu. “It just wanted to broaden its investor base to fixed income investors and pave the way in opening the green bond market in China.”

In terms of geographic distribution, 97% of the paper was sold in Asia and the remaining 3% in Europe. By type of investors, banks were the biggest buyers as they accounted for 70%, followed by fund and asset managers with 17%, sovereign wealth funds and agencies 10%, insurance companies 2% and retail, 1%.

Bank of China and Deutsche Bank were the two other joint global coordinators, bookrunners and lead managers for the transaction.

The International Finance Corporation (IFC) also launched a ground breaking green bond transaction when it issued on August 3 a green Masala bond, raising 3.15 billion rupees (US$49.2 million). Listed on the London Stock Exchange (LSE), this was the first green bond issued in the offshore rupee market with the proceeds to be used for private sector investments that address climate change in India.

Solely underwritten by J.P. Morgan, the five-year bonds were priced at par with a similar coupon and yield of 6.45% per annum. The IFC, a member of the World Bank group, will invest the bond proceeds in a green bond issued by YES Bank, one of India’s largest commercial banks. YES Bank, in turn, will invest the proceeds of its bond in renewable energy and energy efficiency projects – mainly in the solar and wind sectors.

The bonds are drawn under IFC’s US$3 billion offshore rupee Masala bond programme. Under the programme, IFC has issued bonds worth over 103 billion rupees in a range of tenors, building an AAA yield curve and attracting new investors to the offshore rupee markets. It has also issued onshore Maharaja bonds under a US$2.5 billion programme for issuances in India’s domestic capital markets.

IFC vice-president and treasurer Jingdong Hua said in a statement the green Masala bond demonstrates the powerful role of capital markets in mobilizing international savings to help close the climate finance gap.

The IFC is one of the earliest issuers of green bonds, launching a green bond programme in 2010 to help catalyze the market and unlock investment for private sector projects that support renewable energy and energy efficiency projects. As of June 2015, it had issued US$3.8 billion in green bonds, including two benchmarks US$1 billion deals that were, at the time, the largest such issuances in the markets, and a 500 million renminbi-denominated green bond that was the first such offering listed on the LSE.

YES Bank actually issued India’s first ever green infrastructure bonds in February this year amounting to 500 crores rupees (US$80.4 million). Proceeds from the 10-year bonds are allocated to finance green infrastructure projects in renewable energy and energy efficiency projects, including solar power, wind power, biomass and small hydro projects.

Another green bond issuer out of India is the Export-Import Bank of India, the country’s premier export finance institution, which issued a US$500 million offering in March this year. The five-year bonds represented the first US dollar-denominated green bond deal out of India as well as the first benchmark-sized green bond out of Asia in 2015.

An Asia Development Bank (ADB) report released in June this year notes that green bonds are slow to take off in Asia. Part of the reason is that there is a smaller pool of assets in the region that are targeted at sustainable investing. However, there have been plenty of renewable energy firms that have successfully raised funds in Asia. It was just that they did not choose to label their bonds as green bonds.

In March 2015, ADB raised US$500 million from its inaugural green bond issue, aimed at channelling more investor funds to ADB projects that promote low-carbon and climate-resilient economic development.