(Bloomberg) -- China’s government has mandated banks as it seeks to raise as much as 6 billion yuan ($830 million) from an inaugural sale of green bonds in London.
A fixed income investor conference on the sales of the yuan-denominated three-year and five-year bonds will be held starting April 1 in London, according to a person familiar with the matter, who asked not to be identified discussing private details.
The move follows pledges from Chinese and UK officials in January to expand cooperation on bond sales, and supports the No. 2 economy’s ambition of taking a greater role in global climate finance and diplomacy as the US retreats under President Donald Trump.
“This is a positive move by China,” said Rose Choy, research director for Asia Pacific at the Anthropocene Fixed Income Institute, a nonprofit. “A clear signal to the market that China intends to stay committed to the green transition agenda despite the US backtracking.”
Global ESG bond funds have traditionally invested in euro and dollar issuances, meaning the yuan-denominated securities could add new demand, provided the use of proceeds aligns with investor expectations. “The relatively short tenors are a good start to test the market appetite,” Choy said.
While global issuance of green bonds slowed in the final three quarters of 2024 amid a wider retreat from climate-related financing instruments, Chinese entities are the largest issuers of the bonds so far this year, data compiled by Bloomberg Intelligence shows.
Bank of China Ltd., Bank of Communications Co., Barclays PLC, China International Capital Corp Ltd., Crédit Agricole CIB, HSBC Holdings Plc, Industrial & Commercial Bank of China Ltd. and Standard Chartered Plc have been mandated as joint lead managers and joint book-runners for the deal, according to the person familiar with the details.
China’s Ministry of Finance confirmed Wednesday it planned to issue up to 6 billion yuan of sovereign green bonds in London. The ministry didn’t immediately respond for a request for additional comment on details including the bank mandates.
“China’s sovereign green bonds will be a strong counter to the doom and gloom in the sustainable debt market right now driven by the anti-ESG sentiment in the US,” said Jonathan Luan, head of sustainable finance research at BloombergNEF. “It is a huge signal for investors from, or active, in China on Beijing’s intention to leverage this market for its climate actions.”
Investors in Europe, the largest sustainable debt market, and elsewhere are seen as likely to closely scrutinize China’s planned use of proceeds from its green bond sales, while some funds may remain reluctant to invest in the world’s top polluting nation as a result of social or governance concerns.
China is pursuing a range of green plans, including an acceleration of grid spending to integrate more renewables and the addition of more zero-carbon industrial parks, Premier Li Qiang said earlier this month in an annual work report to the National People’s Congress. The nation will “actively engage in and steer global environmental and climate governance,” he said in the report.
The country raised $2 billion from regular three- and five-year securities in a deal that was sold in Saudi Arabia in November, following 2 billion euros of notes sold in Paris in September.
--With assistance from Ameya Karve and Fran Wang.
(Updates with comment in fourth paragraph.)
