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ESG Investing / Treasury & Capital Markets
China Merchants Bank prints first green bond
Proceeds to be used to finance low-carbon transportation projects
Chito Santiago 3 Sep 2020

THE Hong Kong branch of China Merchants Bank (CMB) on September 2 priced its inaugural green bond amounting to US$800 million with an emphasis on low-carbon transportation projects.

The Reg S five-year deal was priced at 99.464% with a coupon of 1.20% to offer a yield of 1.311%. This was equivalent to a spread of 105bp over the US treasuries, which was in line with the final price guidance and 45bp inside the initial price range of 150bp area.

The bond was issued under CMB’s newly-launched green, social and sustainability bond framework and it was a climate-certified offering under the Climate Bonds Standard. The bond proceeds will be used to finance the development of efficient, green, safe and affordable urban transportation systems, reducing the pollution problems caused by fossil-fuel based transportation, and contributing to sustainable urban development in China.

“The inaugural low-carbon transportation green bond from CMB is a landmark transaction demonstrating best market practice for other issuers to follow to support green, sustainable urban development and the transition to a low-carbon economy,” says Carmen Tsang, vice-president for sustainable banking, Asia-Pacific, at Credit Agricole CIB.

The deal generated an order book in excess of US$1.7 billion with 98% of the bond distributed in Asia-Pacific and 2% in EMEA. By type of investors, banks accounted for the bulk of the paper with 77%.

Bank of China, Citi, CMB International, CMB Wing Lung Bank, Credit Agricole and J.P. Morgan acted as the joint global coordinators for the transaction, as well as joint bookrunners along with Agricultural Bank of China (Hong Kong), BNP Paribas, CCB International, ICBC (Asia), KGI (Asia), MUFG, Oversea-Chinese Banking Corporation and Standard Chartered. Credit Agricole and J.P. Morgan were also the joint green structuring agents.

Under its bond framework, CMB has nominated seven eligible metro projects with a total value of over 7.74 billion renminbi (US$1.13 billion). The bank’s asset and liability management department will annually review the eligible green projects funded, and on a timely basis, make replacement and addition as necessary to ensure the full amount of the proceeds are allocated to eligible green projects.

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