Shanghai Pudong Development Bank Underwrites China’s First “Carbon Asset” Bonds

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Regional lender Shanghai Pudong Development Bank (SPDB) has just underwritten the first issue of “carbon asset” bonds on China’s interbank bond market.

The “22 Anhui Energy SCP004 (Carbon Asset)” (22年皖能源SCP004(碳资产) issue raised 1 billion yuan for Anhui Province Energy Group Company Limited.

The bonds are a combined fixed rate and floating rate instrument with a term of 260 days. The floating rate component is pegged to carbon emissions abatement returns, while the fixed rate component is 1.8%.

The issue was 6.6 times oversubscribed, with investors including commercial banks, securities companies, trust companies and fund companies.

The instruments are the first bonds in China to be marketed as “carbon assets”, as well as the first bond products to be pegged to returns on carbon emissions abatements.

China’s carbon market officially commenced trading last year, and has since seen the trading of 194 million tonnes in carbon emissions reductions with a cumulative value of 8.491 billion yuan.