Following the printing of its first green bond earlier this month, China Merchants Bank (CMB) returned to the market and priced, on September 22, a dual-tranche bond offering totaling US$700 million, including its first sustainability bond.

 

Issued through its Luxembourg branch, the three-year fixed rate sustainability bond amounting to US$300 million was priced at 99.544% with a coupon of 0.95% to offer a yield of 1.105%. This was equivalent to a spread of 95bp over the US treasuries, which was in line with the final price guidance and 45bp tighter than the initial price range of 140bp area.

 

The other tranche, issued through the bank’s Singapore branch, was a three-year floating rate bond amounting to US$400 million. It was priced at par with a similar coupon and re-offer spread of 85bp over the three-month US dollar Libor. This was also in line with the final price guidance and 45bp inside the initial price guidance of 130bp area.

 

Proceeds from the sustainability bond will be used to fund projects that meet the criteria of eligible green projects and eligible social projects as defined in CMB green, social and sustainability bond framework. The amount will be allocated to support sustainable city development in China focusing on public medical infrastructure and clean transportation.

 

Proceeds from the floating rate bond, on the other hand, will be earmarked for working capital and general corporate purposes.

 

The sustainability bond will be listed on the Luxembourg Stock Exchange – the first by a Chinese financial institution – while the floating rate bond will be listed on the Singapore Exchange.

 

Bank of China, Citi, CMB International, CMB Wing Lung Bank, Credit Agricole CIB and J.P. Morgan were the joint global coordinators for the transaction, as well as joint bookrunners along with Agricultural Bank of China (Hong Kong branch), BNP Paribas, CCB International, CCB (Asia), KGI Asia, MUFG, OCBC Bank and Standard Chartered.

 

Credit Agricole and J.P. Morgan acted as the joint sustainability structuring agents for the sustainability bond.

 

CMB on September 2 printed its inaugural green bond amounting to US$800 million for five years. Issued through its Hong Kong branch, it was a climate certified offering under the Climate Bonds Standard, focusing on low-carbon transportation projects