CapitaLand Investment (CLI), a global real asset manager headquartered and listed in Singapore, has raised 1 billion yuan (US$137.71 million) from the second tranche of its inaugural sustainability-linked panda bond, bringing the total amount raised to 2 billion yuan (US$275.42 million).

The second and final tranche attracted strong interest from institutional investors with the orderbook 2.64x subscribed.

The panda bond was issued at a fixed coupon rate of 2.8% per annum. This is a record low coupon rate among panda bonds with a three-year tenor issued under a private placement, which will contribute to lowering CLI’s financing costs.

CLI’s panda bond is the first sustainability-linked bond issued in China by a Singapore company. The company earlier raised 1 billion yuan from the first tranche in March 2024 with a fixed coupon rate of 3.5% per annum. Each tranche of the panda bond has a three-year tenor.

CLI will use the net proceeds from the panda bond to refinance existing borrowings.

Energy consumption target

Including the panda bond, the company’s total sustainable finance has reached S$18 billion (US$13.41 billion) since 2018.

The sustainability-linked panda bond is pegged to CLI’s target to reduce energy consumption intensity by 7.5% at its properties in China by 2025 from the base year of 2019.

This is in line with the company’s commitment to reduce Scope 1 and Scope 2 carbon emissions by 46% by 2030 and achieve net-zero carbon emissions for Scope 1 and Scope 2 by 2050 as outlined in its 2030 Sustainability Master Plan. The targets are validated by the Science Based Targets initiative (SBTi) for a 1.5°C scenario, in line with the goals of the 2015 Paris agreement.

“Demand for our inaugural panda bond continues to be strong, affirming investors’ confidence in CLI’s long-term competitiveness and strong execution capabilities,” CLI chief executive officer Puah Tze Shyang says.

“The successful issuance has deepened our access to domestic funding in line with our China for China strategy. It also dovetails CLI’s capital sources with its sustainability goals as we continue to seek responsible growth. Tapping on lower-cost renminbi capital will help to mitigate foreign exchange fluctuations and further demonstrates our disciplined capital management.”

Top credit rating

Yuan-denominated panda bonds are issued by foreign companies in the Chinese Interbank Bond Market.  CLI’s panda bond is rated AAA by China Chengxin International Credit Rating Co Ltd.

China International Capital Corporation is the lead underwriter and bookrunner while HSBC Bank (China) is the joint lead underwriter and joint bookrunner for this transaction.

CLI has been operating for 30 years in China, one of its core markets. It has more than 200 properties across over 40 cities with total assets under management of approximately S$46 billion in the country. Its portfolio in China includes office, retail, lodging, business parks, logistics and data centres in five core Tier-1 and Tier-2 city clusters.