The New York branch of the Agricultural Bank of China (ABC) on January 11 priced a US$950 million dual-tranche bond offering, including a green bond, taking advantage of a constructive issuance window.

The Reg S only deal consisted of a three-year green bond amounting to US$650 million, which was priced at 99.855% with a coupon of 0.85% to offer a yield of 0.899%. This was equivalent to a spread of 68bp over the US treasuries, which was in line with the final price guidance, and 42bp tighter than the initial price range of 110bp area.

The second tranche was for five years amounting to US$300 million, which was priced at 99.807% with a coupon of 1.25% and a re-offer yield of 1.29%. This represented a spread of 80bp over the US treasuries, which was also in line with the final price guidance, and 40bp inside the initial price guidance of 120bp area.

The transaction marks ABC New York’s branch successful return to the international debt capital markets after nearly five years and represents another landmark green bond offering following the bank’s debut in this space in 2015.

The green bond, which drew a strong demand from reputable Asian and European green investors, is the first by a Chinese financial institution in 2021. The issuance is aligned with the four pillars of the International Capital Market Association's (ICMA) Green Bond Principles, with the proceeds to be used to finance and/or refinance eligible green assets under three pre-defined categories, namely renewable energy, clean transportation, and sustainable water and wastewater management.

ABC has a long-term commitment to China’s green initiative and the ultimate target of carbon neutrality. It is actively engaged in the development of green credits, green innovation, green operation and corporate social responsibility (CSR) activities. As one of the premiere overseas branches of ABC, the New York branch places a strong focus on developing an internationalized green finance business.

The transaction attracted strong demand from high-quality international investors, including central banks, sovereign wealth funds, global banks, asset managers, funds and private banks across Asia, Middle East, Europe and the United States (offshore), demonstrating investors’ continued appreciation of ABC’s credit strength.

ABC (Hong Kong), BofA Securities, Citi, Crédit Agricole CIB, J.P. Morgan and Mizuho Securities were the joint global coordinators for the transaction as well as the joint bookrunners and lead managers along with Bank of China (Hong Kong), Bank of Communications, Chiyu Banking Corporation, CLSA, CMB Wing Lung Bank, DBS, HSBC, Standard Chartered and Wells Fargo Securities. BofA Securities and Crédit Agricole CIB acted as the joint green structuring advisers for the green bond tranche.