London Stock Exchange welcomes first ever Chinese Green Covered Bond

  • London listed bond raises $500m from international investors
  • European and Asian take up of innovatively structured bond
  • Confirms UK’s position as global partner of choice for international Chinese fundraising
  • Covered bond listing demonstrates Bank of  China ‎ global green and sustainability leadership
  • Listing underlines London’s unmatched status as international centre for sustainable finance and innovation

London Stock Exchange today welcomes the listing of the first ever Chinese Green Covered Bond, issued by Bank of China. The bond, part of Bank of China’s wider MTN programme, creates in effect a new and innovative asset class for global investors, raised $500m. To celebrate the listing, Tian Guoli, Chairman, Bank of China and Simon Kirby MP, Economic Secretary to the Treasury opened London trading.

The net proceeds of the three year, 1.875% coupon Green Covered Bond will be allocated to Eligible Green Projects across renewable energy, pollution prevention, clean transportation and sustainable water management. The offer was 1.8 times oversubscribed and investors split between Asia and Europe.

Tian Guoli, Chairman, Bank of China said:
“Being rooted in London for 87 years, we regard it as our own mission to connect China’s promising Green Bond market with London’s vibrant capital market. This particular green covered bond connects China’s onshore green bond market with international investors, via an asset backed structure. With the support from governments and central banks, with the cooperation with our friends in the industry, we can together develop a greener financial market.”

Simon Kirby MP, Economic Secretary to the Treasury said:
“Meeting the climate change targets agreed in Paris last year requires a major rethink of how we finance projects. The UK has the knowledge, expertise and capital to lead the way but meaningful progress requires international co-operation. Today’s news is proof that the close collaboration between the UK and China is paying off and helping us tackle the most defining challenge of our time.”

Xavier Rolet, CEO, London Stock Exchange Group said:
“In October 2015, during last year’s landmark visit to London by President Xi Jinping, we hosted the first ever international issuance of a green bond by a Chinese institution.  Today's issuance by Bank of China is another world first for green finance and London Stock Exchange is proud to be the partner of choice.  It underscores the global leadership on green finance provided by China during their G20 Presidency and London Stock Exchange Group and the City as a whole are committed to be leading partners in the internationalisation of China's capital markets.

“Taking advantage of the efficient listing process and accessing through London, the world’s deepest international investor base, this listing demonstrates that Chinese issuers can bring innovation to bear in exciting new areas such as green finance. We look forward to further  building this market with Chinese partners and authorities over the long-term.”

The listing brings to the forefront the rapid development of strong financial links between London and China. In the last year alone:

  • More than 64 so-called dim sum bonds with a combined outstanding amount of RMB 38 billion have been listed in London
  • In June, London was selected for the listing of the first Chinese sovereign RMB bond to be issued outside of China
  • China’s four major banks and China Development Bank have all listed bonds on London Stock Exchange

London Stock Exchange Group (LSEG) has been supporting investors and issuers in the transition to a low-carbon and sustainable economy for over a decade, developing innovative products and services in close collaboration with the market. Our comprehensive sustainable finance offering is focused on green financing for issuers (both debt and equity), indexing and analytics. Our markets are home to a diversified portfolio of green bonds, ETFs, renewable investment funds and corporates whose business models encompass alternative energy. FTSE Russell, the global index leader, has long been a pioneer in the development of benchmarking tools enabling investors to integrate ESG factors in their portfolios and to track the increasing shift towards a green economy.

LSEG joined the UN’s Sustainable Stock Exchanges initiative as a Partner Exchange in 2014 and has also signed The Paris Pledge for Action.

Further information can be found online at our Global Sustainable Investment Centre

Recent LSEG green finance initiatives and milestones include:

  • In 2016 alone, 14 new green bonds in 5 different currencies have raised approximately $5 billion; in total 40 green bonds are listed on London Stock Exchange which have raised £10.5 billion
  • On Monday, 7 November FTSE Russell, the global index provider, announced the creation of a new index, the FTSE All-World Ex CW Climate Balanced Factor Index, the first to combine a smart beta factor approach alongside climate change considerations
  • The index has been chosen by Legal & General Investment Management for its new Future World Fund, which HSBC Bank UK Pension Scheme has selected for its equity default option, worth £1.85 billion, in its DC scheme.
  • There are 35 ‘green companies’ which have raised $10 billion combined in London including, 14 renewable investment funds
  • London Stock Exchange is home to a number of global first green bond issuances from India’s Axis Bank, China’s Agricultural Bank of China, Japan’s  Development Bank of Japan and the IFC, a member of the world bank group

 

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For further information:

Media

 

Tom Gilbert

+44 (0)20 7797 1222

newsroom@lseg.com

 

Notes to editors:

About London Stock Exchange Group:

London Stock Exchange Group (LSE.L) is an international markets infrastructure business. Its diversified global business focuses on capital formation, intellectual property and risk and balance sheet management. LSEG operates an open access model, offering choice and partnership to customers across all of its businesses. The Group can trace its history back to 1698.

The Group operates a broad range of international equity, ETF, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS (Europe's leading fixed income market); and Turquoise (a pan-European equities MTF). Through its platforms, LSEG offers market participants, including retail investors, institutions and SMEs unrivalled access to Europe’s capital markets. The Group also plays a vital economic and social role, enabling companies to access funds for growth and development.

Through FTSE Russell, the Group is a global leader in financial indexing, benchmarking and analytic services with approximately $10 trillion benchmarked to its indexes. The Group also provides customers with an extensive range of real time and reference data products, including SEDOL, UnaVista, XTF and RNS.

Post trade and risk management services are a significant part of the Group’s business operations. In addition to majority ownership of LCH, a multi-asset global CCP operator, LSEG owns CC&G, the Italian clearing house; Monte Titoli, a leading European custody and settlement business; and globeSettle, the Group’s CSD based in Luxembourg.

LSEG is a leading developer and operator of high performance technology solutions, including trading, market surveillance and post trade systems for over 40 organisations and exchanges, including the Group’s own markets. Additional services include network connectivity, hosting and quality assurance testing. MillenniumIT, GATElab and Exactpro are among the Group’s technology companies.

Headquartered in the United Kingdom, with significant operations in North America, Italy, France and Sri Lanka, the Group employs approximately 3,500 people.

Further information on London Stock Exchange Group can be found at www.lseg.com