Green Dim-Sum Bonds
China has enjoyed unprecedented growth in recent years but the rapid transition to a consumer-driven economy has left the country facing environmental challenges. The Chinese leadership has been quick to acknowledge this and recognises the important role green finance can play in demonstrating a commitment to sustainability, while delivering positive results for its citizens. China’s leadership in green finance was confirmed in September 2016 with the publication by the People’s Bank of China of the “Guidelines for Establishing the Green Financial System”, spanning the banking and insurance sectors, capital markets, local finance and international cooperation. As stated in the guidelines, China’s demand for green finance to support green industries and sustainable development is constantly expanding and London is the natural hub for such capital raisings.
The first offshore Chinese renminbi bond was issued in 2014 by the International Finance Corporation. Since then, London Stock Exchange has become the global hub for Green and Dim-Sum bond issuances and the successful issuances over the last year demonstrate that a vital new international channel of finance has opened up for Chinese issuers - a few success stories and landmark listings are showcased here.
- To mark the occasion of the Chinese State visit in October 2015, London Stock Exchange hosted the inaugural China Green Bond Conference where People’s Bank of China delivered the keynote address.
- In the same week of the 2015 Chinese State visit, Agricultural Bank of China became the first global Chinese Green Bond issuer, successfully listing a US$995 million dual tranche USD/RMB denominated bond in London, which was four times oversubscribed. As the Chairman of Agricultural Bank of China said on the occasion of the market open ceremony at London Stock Exchange, the successful issuance and listing of renminbi-denominated green bonds on London Stock Exchange’s dedicated green bond segments not only fulfils the ambitions that were announced “as part of the policy outcomes of the latest UK-China Economic and Financial Dialogue, but also manifests the close and fruitful cooperation between Chinese and UK financial institutions on green finance, climate change and adaption initiatives.”
- In June 2014, the International Finance Corporation became the first issuer globally to issue a green bond denominated in offshore Chinese renminbi, coining the term “Green Dim-Sum Bond”.