Banks and other financial institutions may be at the forefront in China’s issuance of green bonds in the international debt capital markets, but corporates are doing their fair share to raise funds for their eligible green projects.

China Three Gorges Corporation (CTG) was the latest corporate to do so when it printed on June 14 a seven-year 650-million-euro (US$730 million) offering – its first green bond issuance in the offshore market. The Reg S deal was priced at 99.967% with a coupon of 1.30% – or equivalent to a spread of 93bp over mid-swap. This was 17bp inside of the initial price thought of the 110bp area when the deal was announced in the morning of June 14.

CTG’s issuance came less than a year after the company launched its inaugural local currency green bonds amounting to 6 billion yuan (US$883 million). The latest transaction was executed following a series of fixed income investor meetings in Hong Kong, Singapore and Europe commencing on June 6. The bonds are issued through Three Gorges Finance II (Cayman Islands) and guaranteed by CTG.

The company engaged Ernst & Young to perform limited assurance procedures to confirm the alignment of the green bonds with the Green Bond Principles of 2016.

The proceeds will be used to finance eligible green projects in the renewable energy category, including the production and transmission of renewable energy, and the manufacturing of renewable energy appliances and products. Renewable energy includes solar, wind and biomass energy.

In terms of geographic distribution, 43% of the bonds were sold in Asia (including 20% in Singapore, 15% in China and 8% in Hong Kong), 18% in Switzerland, 9% in Germany/Austria, 8% each in the UK and Iberia, 6% in Nordics, 4% in France, 3% in Benelux and 1% in other jurisdictions.

By type of investors, fund managers accounted for 59%, banks 24%, official institutions 6%, insurance companies 6% and other investors 5%.

Bank of China, Deutsche Bank and J.P. Morgan were the joint global coordinators for the transaction, as well as joint bookrunners and lead managers along with CCB International, ICBC, Natixis, Standard Chartered and UBS. Citic CLSA Securities and DBS acted as co-managers.

In launching its maiden offshore green bonds, CTG has been expanding its footprint in renewable energy. In 2016, the company acquired the Brazilian hydro assets of Duke Energy for US$1.2 billion and a German offshore wind portfolio, WindMM, from Blackstone Energy Partners and affiliated private equity funds for US$1.8 billion.

As of end-2016, CTG had a total installed capacity of 69GW, of which domestic hydropower accounted for 50.6GW. According to Moody’s Investors Service, the company also has wind and solar energy capacity for 7.4GW as well as an additional 8.5GW operating capacity in overseas projects, including in Brazil and Germany. It likewise has 31GW hydro capacity under construction until 2021.

Green bonds are an emerging asset class and the issuance has been underpinned by the UN COP 21 climate agreement forged in December 2015. While the volume remains small in the context of the overall global bond market, it has attracted robust demand from institutional investors such as fund managers, insurance companies, central banks and sovereign wealth funds.

China dominated the issuance of US dollar-denominated green bonds out of Asia (outside of Japan and Australia) this year, with a volume of over US$5.46 billion from 16 deals as of June 15. According to Thomson Reuters, this represented 82% of the total US$6.66 billion issued during the period.

In 2016, China issued US$20.60 billion worth of green bonds, up from just US$1.39 billion in 2015 and US$160.6 million in 2014.