China issues inaugural sovereign green bonds

The Ministry of Finance of People's Republic of China (MOF) has launched US$824 million green bonds of three-year and five-year maturity on the London Stock Exchange's (LSE) international securities market, marking the first time that China has built a sovereign green bond.

The issuances are aligned with China's commitment to scale up its nationally determined contributions by adopting more robust policies and measures - and the aim to achieve carbon peaking by 2030 and carbon neutrality by 2060.

The joint lead managers and bookrunners consist of Bank of China; Bank of Communications, Barclays; China International Capital Corporation; Crédit Agricole CIB; HSBC; ICBC; and Standard Chartered Bank. Crédit Agricole CIB and Bank of China acted as green structuring advisers.

The green bonds are issued under the People's Republic of China Sovereign Green Bond Framework, released in February, which serves as the foundation for these bonds.

From this, China aims to diversify the global green bonds market, encourage domestic issuer participants, and generate investment in the green financial markets.

Meanwhile, Climate Bonds Initiative, the international organisation that promotes investment in projects and assets for low carbon and climate resilient economy, celebrated the announcement.

The orgnaisation has been involved in a Bank of China's task force that recommended the creation of a domestic green bonds market, and it has developed into "one of the largest green finance markets in the world."

Commenting, Climate Bonds Initiative head of China programme Wenhong Xie said the issuance is a "landmark event" that advances the global green finance agenda.

"Backed by sovereign credit and aligned with environmental goals, this issuance addresses the growing global demand for sustainable assets while promoting cross-border investment through high transparency and adherence to international standards," Xie said.

"It also establishes a pricing benchmark for RMB-denominated green bonds, encouraging local governments, financial institutions, and corporations to further engage in the green bond market.

"This milestone will help attract international capital into critical sectors and climate resilience projects, expanding the financing options for China's green transition."

The issuance also comes as the volume of sustainable debt aligned with relevant climate bonds approaches US$6 trillion.