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Industrial Bank prices blue and Covid-19 resilience bonds
Hong Kong branch of Chinese bank prints first HKQAA-certified pandemic facility
2 Nov 2020 | Chito Santiago

Chinese lender Industrial Bank Company on October 29 priced the first blue bond by a China joint stock commercial bank amounting to US$450 million to support marine pollution prevention and sustainable blue economic development in China. It focuses on the areas of marine renewable energy, sewage pipelines and sewage treatment in coastal areas, shipping and port pollution prevention facilities, and urban flood control facilities in coastal areas.

At the same time, the bank printed a HK$3 billion (US$387.10 million) Covid-19 resilience bond, representing the first Covid-19 resilience bond certified by the Hong Kong Quality Assurance Agency (HKQAA).

The issuance was designed to strengthen general resilience against the Covid-19 pandemic by supporting the production of preventive medical clothing, masks, disinfectants and other medical equipment, and the research and distribution of medicines and vaccines, and to ensure a stable supply of essentials during the pandemic to hard-hit areas. Both the blue bond and the Covid-19 resilience bond were issued through the bank’s Hong Kong branch.

The blue bond was for three years and was priced at 99.806% with a coupon of 1.125% to offer a yield of 1.191%. This was equivalent to a spread of 100 basis points (bps) over the US Treasuries, which was in line with the final price guidance and 45bps tighter than the initial price range of 145bps.

The Covid-19 resilience bond was for two years and was priced at par with a similar coupon and re-offer yield of 1.10%, which was also in line with the final price guidance and 45bps inside of the initial price guidance.

The blue bond is aligned with the International Capital Market Association green bond principles, and the bank has obtained a positive second-party opinion from Sustainalytics for its updated green bond framework, which extended into the ocean and water-related eligible asset categories.

The Covid-19 resilience bond is the first bond in the world that meets the HKQAA’s newly-established Covid-19 resilience finance certification scheme.

Industrial Bank has been exploring sustainable finance business and gradually adopting green finance as a strategic business of the group for 14 years. It was the first Chinese bank to adopt the Equator Principles in 2008. It issued China’s first green financial bond and China’s first green asset-backed securities in 2016, as well as the first offshore dual-currency green financial bond in 2018.

Industrial Bank also became the first batch of banks to sign the UN Principles for Responsible Banking in 2019, and pledged to ensure that business strategies are consistent with the Paris climate agreement and the UN Sustainable Development Goals. In 2019, it completed the issuance of 80 billion yuan$11.96 billion) worth of green bonds, hitting – among the commercial banks – a new high for green bond issuance size.

Both bonds were drawn from the bank’s US$5 million medium-term note programme. Industrial Bank (Hong Kong), Agricultural Bank of China (Hong Kong), Bank of China, Bank of Communications, China Industrial Securities, China Minsheng Banking Corporation (Hong Kong), Chiyu Banking Corporation, Citi, CMB Wing Lung Bank, and Credit Agricole CIB were the joint global co-ordinators for the transaction, as well as the joint bookrunners and lead managers along with CCB International, CCB Singapore, China Everbright Bank (Hong Kong), China International Capital Corporation, CLSA, CMB International, CMBC Capital, CNCB Capital, Deutsche Bank, Emirates NBD Capital, Guosen Securities (HK), Guotai Junan International, Haitong International, Huarong International Securities, Nanyang Commercial Bank, Shanghai Pudong Development Bank (Hong Kong), SinoPac Securities (Asia), SPDB International, and Standard Chartered.

Industrial Bank and Credit Agricole acted as the joint structuring advisers.

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