China Development Bank (Hong Kong) (CDBHK) on September 2 priced its first green bond amounting to US$500 million, which also represented the first green bond offering by a Chinese policy bank in the international debt capital market in 2021.

The three-year Reg S deal was priced at 99.955% with a coupon of 0.625% to offer a yield of 0.640%. This was equivalent to a spread of 23bp over the US treasuries, which was in line with the final price guidance, and 37bp inside the initial price range of 60bp area.

The green bond issuance, capped at US$500 million, strictly complied with the international Green Bond Principles (2021) standards and the adherence was verified by S&P Global Ratings, which acted as the green framework alignment opinion provider. In addition, the transaction received a certification from the Hong Kong Quality Assurance Agency.

The deal was 8.6x oversubscribed with a final order book exceeding US$4.2 billion from 62 accounts. About 68% of the total demand came from the deal arrangers. In terms of geographical distribution, 71% of the bonds were distributed in Asia-Pacific and 29% in EMEA. By type of investors, banks accounted for 63%, central banks and sovereigns 28%, and fund managers and private banks 9%. About 39% of the issuance size was allocated to dedicated green investors, central banks and quasi-sovereign financial institutions.

The bonds are drawn under the bank’s US$30 billion debt issuance programme and the proceeds are earmarked for the financing and/or refinancing of eligible green projects in accordance with CDBHK’s green bond management guideline, such as renewable energy, clean transportation and pollution prevention.

Agricultural Bank of China (Hong Kong), ANZ, Bank of China, Bank of Communications (Hong Kong), BNP Paribas, China Construction Bank (Asia) Corporation, China Everbright Bank (Hong Kong), CLSA, CMB Wing Lung Bank, Crédit Agricole CIB, DBS, HSBC, ICBC (Asia), Mizuho Securities, Shanghai Pudong Development Bank (Hong Kong) and Standard Chartered were the joint bookrunners and lead managers for the transaction.