The Hong Kong branch of Industrial Bank Co., Ltd. has issued two medium-term notes on the offshore market to raise funds for carbon emission mitigation efforts.
On 3 June Industrial Bank’s Hong Kong branch raised approximately USD$922 million via the issue of a 3-year US-dollar note and a 3-year Hong Kong dollar note.
The 3-year US-dollar note raised $600 million, with a final price of T3 + 58 basis points, and an issue rate of 0.875%, while the 3-year HK dollar note raised 2.5 billion HK dollars (approx. USD$322.26 million), with an issue rate of 0.75%.
73 institutional investors from around the world took part in bidding for the issue, of whom a large number were specialist ESG (environmental, social and corporate governance) institutional investors from the EU and North America. The issue was 4.45-times oversubscribed.
The “carbon neutrality” instruments were distributed via Bond Connect’s e-Prime platform, with funds raised to be invested and managed under the “Industrial Bank Co., Ltd. Green Bond Framework” (兴业银行绿色债券框架).
In order to ensure that investments meet the strictest international standards for green financing, funds raised will only be directed towards carbon mitigation projects that satisfy the Green Bond Principles of the International Capital Market Association (ICMA) and the Green and Sustainable Finance Certification Scheme of the Hong Kong Quality Assurance Agency (HKQAA). Projects are also required to obtain certification from leading ESG ratings agency Sustainalytics.
“This carbon neutrality bond is another innovative effort by Industrial Bank to drive green bond innovation and connect with financing on international markets,” said an Industrial Bank executive.
As of the end of March Industrial Bank had provided 3.3 trillion yuan in green financing to 30,475 enterprises by means of green loans, green bonds, green leasing and other products.
Industrial Bank has also issued 145.455 billion yuan in green bonds both domestically and offshore since 2016, when it became the first lender in China to engage in a green debt fund-raising.