The Hong Kong branch of China Construction Bank (CCB) became the first Chinese financial institution to issue an international green bond in 2020 when it priced on July 28 a dual-tranche offering totaling US$1.2 billion.
The Reg S deal included a three-year fixed rate bond amounting to US$500 million, which was priced at 99.729% with a coupon of 1% to offer a yield of 1.0892%. This was equivalent to a spread of 93bp over the US treasuries, which was in line with the final price guidance and 42bp inside the initial range of 135bp area.
The other tranche was a five-year fixed rate bond amounting to US$700 million, which was priced at 99.706% with a coupon of 1.25% to offer a yield of 1.311%. This represented a spread of 105bp over the US treasuries, which was also in line with the final price guidance and 45bp tighter than the initial range of 150bp area.
CCB announced the deal mandate to a total of 21 banks for a green bond on July 24, having received a pre-issuance certification as climate bonds under the Climate Bonds Standard. The Climate Bonds Initiative and the Hong Kong Quality Assurance Agency were the external parties providing certificates for the bonds.
Investor calls were held on July 27 and CCB opened the books in the morning of July 28 in Asia with an initial price range of 135bp area for the three-year tranche and 150bp area for the five-year tranche.
The deal generated a combined order book of US$5.9 billion, with the three-year tranche garnering US$2.7 billion from 74 accounts. In terms of geographic distribution, 64% of the bonds were sold in Asia-Pacific and 38% in EMEA. By type of investors, banks accounted for 54%, asset and fund managers 34%, central banks 10%, pension funds 1%, and private banks and other investors 1%.
The five-year tranche attracted a total demand of US$3.2 billion from 106 accounts, with 64% of the bonds allocated in Asia-Pacific and 36% in EMEA. Banks also drove this tranche as they bought 63% of the paper, while asset and fund managers took 23%, central banks and sovereign wealth funds 12%, pension funds 1%, and private banks and other investors 1%.
Proceeds from the offering, which was drawn from the bank’s US$15 billion medium-term note programme, will be used to finance and/or refinance loans to customers as well as for CCB’s own operational activities in eligible green projects.
China Construction Bank, Agricultural Bank of China, BNP Paribas, Bank of America Securities, Citi, HSBC and Mizuho Securities were the joint global coordinators for this transaction, as well as, joint bookrunners and lead managers along with ANZ, Bank of China, Bank of Communications, BOSC International, Credit Agricole CIB, Commonwealth Bank of Australia, China International Capital Corporation, CTBC Bank, DBS, ICBC, J.P. Morgan, KGI Asia, Standard Chartered and UBS.