Industrial Bank (Hong Kong) on May 11 priced a US$650 million green bond offering, with the use of proceeds intended to be aligned with the Common Ground Taxonomy (CGT).

The Reg S three-year issuance was priced at 99.816% with a coupon of 3.25% to offer a yield of 3.315%. This was equivalent to a spread of 52bp over the US treasuries, which was in line with the final price guidance and 43bp tighter than the initial price range of 95bp area.

The bond was well-received by a diverse base of investors with a 5.23x oversubscription ratio. “The strong reception of the bond, despite slightly challenging market conditions, supports that the market is in demand of high-quality green bond by regular sustainable bond issuers with a credible ESG profile,” says Carmen Tsang, head of sustainable banking for Greater China at Crédit Agricole CIB.

The use of proceeds and governance process of the green bond will be carried out under the Industrial Bank’s green bond framework, while the focus of the bond will go towards supporting high-quality green projects in renewable energy, and low-carbon and low-emission transportation.

The framework is in line with the International Capital Market Association’s (ICMA) Green Bond Principles, as confirmed by a second-party opinion from Sustainalytics. Industrial Bank also engaged the Hong Kong Quality Assurance Agency to issue a second-party opinion, which confirms that the intended use of proceeds is aligned with the CGT, and the governance process of the bond strictly complies with relevant international standards.

The CGT, released in November 2021, is a joint initiative by the People's Bank of China (PBoC) and the European Commission. It contains a list of green and sustainable economic activities that are bilaterally recognized by China and the European Union. According to Industrial Bank, the green bond issuance is aligned to the Common Ground Taxonomy - Climate Change Mitigation, which is not only conducive to accelerating the promotion of carbon emission reduction and facilitating the realization of China’s double carbon goal, but also to the bank’s active response to the PBoC’s direction to promote the harmonization of green taxonomies and refining of the green financial ecosystem.

As China’s first Equator Bank and the first commercial bank in China to explore green finance, Industrial Bank leverages on the dual carbon development trend and further expands its green finance strategy. As of end-March 2022, Industrial Bank’s green loan balance reached 1.46 trillion yuan (US$215 billion), which represents an increase of 76.3 billion yuan from the beginning of the year. Since its debut in the overseas sustainable capital markets in 2018, Industrial Bank has issued a total of US$2.3 billion equivalent of international green bonds.

Industrial Bank, BNP Paribas and Crédit Agricole CIB were the joint green structuring advisers, as well as the joint global coordinators, bookrunners and lead managers for the transaction, along with Agricultural Bank of China (Hong Kong), Bank of China, Bank of Communications, China Minsheng Banking Corporation (Hong Kong) and Citi.

Acting as the joint bookrunners and lead managers were ABC International, Agricultural Bank of China (Macau), Agricultural Bank of China (Singapore), Bank of China (Hong Kong), BOCOM International, BOSC International, CCB International, CEB International, China CITIC Bank International, China Construction Bank (Asia), CCB Singapore, China Construction Bank (Europe), China Everbright Bank (Hong Kong), China Galaxy International, China Industrial Securities International, China International Capital Corporation, China Securities International, China Zheshang Bank Company (Hong Kong), Chiyu Banking Corporation, CLSA, CMB International, CMB Wing Lung Bank, CMBC Capital, CNCB Capital, Emirates NBD Capital, Guotai Junan International, Haitong International, Huafu International, Huatai International, ICBC (Asia), ICBC (London), ICBC (Singapore), Natixis, Shanghai Pudong Development Bank (Hong Kong), Shenwan Hongyuan (Hong Kong), SPDB International, Standard Chartered, and Bank of East Asia.