Agricultural Bank of China announces $US1 billion green bonds issue

23rd October 2015 Andrew Bates

The Agricultural Bank of China has announcement a mixed US$ (US dollar) and CNY (Chinese Yuan) three tranche green bond issuance to the value of US$995 million.

“This is a welcome development in the international green bond market,” said Sean Kidney, CEO of the Climate Bonds Initiative, an investor-focused not-for-profit, promoting investment in the low-carbon economy. “The Agricultural Bank announcement reflects growing Chinese interest in green bonds as an international funding vehicle for low carbon and climate based investment.”

The first bond is US$400 million over 3 years; the second US$500 million over 5 years; and the third is denoted in CNY600 million (US$95 million) for 2 years. Asian investors accounted for 94 percent of demand while the rest went to European investors. All three bonds will be listed on the London Stock Exchange for trading.

“The oversubscription, ranging from four to nine times is a reflection of institutional investor appetite for Chinese sourced green bonds,” added Kidney. “In addition, the commitment by the bank outlining the end use of proceeds for the bonds will include an annual reporting process providing important transparency and disclosure to the bond issues, and setting an excellent example for future Chinese green bond issuers.”

Joint global coordinators were ABC International, Barclays, HSBC and JP Morgan, along with additional joint bookrunners, Bank of America Merrill Lynch, Morgan Stanley, Goldman Sachs, Standard Chartered, and Wells Fargo Securities.

The Agricultural Bank of China is China’s third largest listed lender trading on the Shanghai and Hong Kong exchanges.

“Of note is that this is the first off-shore Renminbi denoted green bond, a ‘trial balloon’ for future CNY based green bond issuance,” said Kidney. “The People’s Bank of China has made it clear it will be very supportive of offshore CNY green bond issuance. We expect to see a lot more, which will add a very green flavour to the growing internationalisation of the Renminbi.”

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