Industrial Bank (IB) took the leading position again in the banking industry in the market of green financial bond, which was just unveiled.
On January 28, the 7th day after the approval on the first issue, IB successfully offered the first green financial bond in China. Receiving over twice subscription, the first issue, worth RMB 10 billion, was offered at the coupon rate of 2.95% for a term of 3 years. Compared with similar bonds, this issue of green financial bond enjoyed great popularity among investors such as state-owned large banks, national joint-stock commercial banks, and securities, insurance and fund companies.
It is learnt that IB launched relevant preparations as early as 2014. The bank kept improving the technical standard, operation procedure, system and mechanism, and risk management system inside, issued the Administrative Measures on Funds Raising for Green Financial Bonds, kept projects in reserve, and established special machine accounts, thus building a solid foundation for making application of offering and managing the use of funds in the later period, and ensuring that the funds of green bonds are used in green industrial projects which have true environmental benefits.
“Opportunity favors the prepared minds. The offering not only witnessed investors in extensive distribution who made active subscription, but also the offering interest rate made a record low among Chinese commercial banks in offering financial bonds of the same rating and term.” said Fang Zhiyong, General Manager of Environmental Finance Department of IB.
In contrast to the common financial bonds, the People’s Bank of China imposed higher and stricter requirements for information disclosure of green financial bonds. Dai Xiaoyuan, General Manager of the Investment Banking Department of IB, said, “In the process of investment road show, investors also paid great attention to the effect of use and information disclosure of the issuer in the later period. It is said that IB engaged the Research Center for Climate and Energy Finance, Central University of Finance & Economics – a member of the Green Finance Committee of China Society for Finance and Banking – as the third party certification institution, which carried out all-course evaluation and certification over the technical standard, project selection, evaluation procedure, arrangement and management of funds use, performance of projects in reserve, and environmental benefits for green financial bonds, while ensuring the truthfulness, integrity and accuracy of information.
The 5th Plenary Session of the 18th CPC Central Committee elevated “Ecological Civilization”, “Beautiful China” and “Green Development” to an unparalleled height. In order to boost the financial institutions to serve the development of green industries and support the national economic restructuring, the People’s Bank of China released the variety of green financial bond in No. 39 announcement in December 2015. The policies on green bond enacted in China, for issuers, simplified the procedure of examination and approval, improved the efficiency of issuance, and set up a unified standard and criterion; for investors, enriched the investment varieties and reduced the investment risks; for the bond market, cultivated the group of responsible investors, and invigorated dealings in the market; and for the green industries, brought new financial sources and steered the orientation of industrial development.
Fang Zhiyong said, “Green financial bond is a financial product that can shoot a number of hawks with one arrow. On the one hand, it showcases the support of the financial regulatory authorities to the development of green finance, and on the other hand, it is of great encouragement for banks to push ahead green finance and provide service to the building of 'Beautiful China'.”
Since the launch of the first green financial product – energy efficiency financing – in China in 2006, IB has kept making innovation, creating many No. 1 cases in the area of green finance in the Chinese banking industry: the first Chinese bank adopting the Equator Principles, establishment of the first institution specialized in green finance in China, the first low-carbon credit card, the first one launching integrated carbon finance service and emission right service, the first one offering comprehensive solutions for utilization and protection of water resources, and the first issue of green finance credit asset-backed securities … The offering of the first green financial bond this time left a bright print on the bank's road of exploring green finance over 10 years.