China'S First "Carbon Neutral" Financial Bond Issued Globally 2021 China'S Green Bond Is Expected To Usher In An Outbreak Period

China's first "carbon neutral" special green financial bond was successfully issued.

On March 18, China development bank officially issued the first "carbon neutral" special "bond pass" green financial bond to global investors. It is understood that the issuance scale of this bond is no more than 20 billion yuan, which is the largest amount of green bond issued in the market at present, which is used to help achieve the goal of carbon peak and carbon neutralization.

According to the 21st century economic report, the final bid winning interest rate of the bonds was 3.07%, lower than the median market estimate of 3.15%.

According to the issuance plan, CDB will issue "21 national development green bond 01" with no more than 19.2 billion yuan in Shanghai, and issue no more than 800 million yuan of "21 national development green bond 01" counter bond. It is reported that all the above bonds have been issued as planned. Among them, the full bidding multiple (subscription multiple) of the 3-year "21 country development green bond 01 clearing" is 8.19 times, which is sought after by the market.

In 2020, the central economic work conference will focus on "carbon peaking, carbon neutralization" as the key work in 2021.

On February 9 this year, the association of dealers launched carbon neutral bonds under the green debt financing tool, requiring the raised funds to be used for green projects with carbon emission reduction benefits.

The Shanghai Stock Exchange and Shenzhen Stock Exchange also launched carbon neutral corporate bonds on February 25, 2021 and March 5, 2021, respectively. As of March 18, 23 "carbon neutral" bonds had been issued in China, with a total scale of 25.914 billion yuan.

The issue of China Development Bank is the first "carbon neutral" financial bonds in China. As a member of the lead underwriter of the financial bonds, Sun Lin, managing director of the fixed income Department of CICC and executive director of global interest rate business, pointed out in an exclusive interview with 21st century economic reporter that at present, domestic enterprises rely heavily on indirect financing, and financial institutions can better support green and "carbon neutral" projects from the source by issuing "carbon neutral" financial bonds Demand, activate the credit system, support the huge potential of green financing and transformation financing.

China's first "carbon neutral" special green financial bond was successfully issued. -Xinhua News Agency

20 billion in wind and solar projects

Different from ordinary bond issuance, as a branch of green bond, carbon neutral debt financing tool is more focused on the use of funds, and needs a third-party professional organization to issue an evaluation and certification report to clearly disclose the environmental benefits information such as carbon emission reduction, and ensure that the carbon emission reduction benefits are "calculable, verifiable and verifiable".

The "carbon neutral" special green financial bonds issued by China Development Bank have also been certified by the third-party certification agency and equator.

The raised funds are planned to be invested in green industry projects including energy conservation, clean transportation, clean energy, pollution prevention and control, ecological protection and adaptation to climate change, resource conservation and recycling.

In the selection of specific green projects supported by financial bonds, CDB requires the expected quantifiable green environmental income index, and the selection standard is that the expected energy saving rate of the project is greater than 50%. In addition, the project also needs to adopt green energy-saving technology or green energy-saving production methods, or the project itself is in line with the national energy conservation and emission reduction and green cycle development policy support.

From the content of the certification report, the wind power and solar power generation projects to be launched by the carbon neutral financial bonds are located in Inner Mongolia, Gansu, Qinghai and other places of the "Three North" large-scale wind power base, and some solar power projects are photovoltaic poverty alleviation projects. Among them, there are 35 wind power projects and 11 solar power projects, with a total planned investment amount of 20.59 billion yuan.

Based on the above reserve projects, the "carbon neutral" financial bonds issued this time are expected to save 7.3497 million tons of standard coal, 18.9973 million tons of carbon dioxide emissions, 4269.73 tons of sulfur dioxide emissions, 4677.52 tons of nitrogen oxide emissions, and 911.52 tons of soot.

In addition to supporting indirect financing of green projects of real enterprises, Sun Lin pointed out that through the issuance of green bonds and "carbon neutral" bonds, financial institutions can effectively sort out the screening and release standards of green and "carbon neutral" credit, cooperate with relevant green industry policies, realize more efficient resource guidance and distribution, and ensure that funds can flow to green and carbon neutral industries 。

"Financial institutions, especially banks, play a central role in the whole financial system and have unique advantages in information acquisition and resource allocation. It is expected that the "carbon neutral" financial bonds issued by financial institutions in the future will further increase in the issuance volume and market share, and will accelerate, which has a very positive significance for achieving the goal of carbon neutrality. " Sun Lin thinks.

Docking with international bond issuing standards

As the first "carbon neutral" financial bond in China. The bonds issued by CDB this time are also the first "carbon neutral" bonds that have obtained the labeling certification of international climate bond Initiative (CBI) in China. The projects invested by raising funds not only meet the relevant standards of green bonds of the people's Bank of China, but also meet the requirements of the latest international climate bond standards (V3.0).

According to CBI, only about half of the green bonds issued in China meet international standards. Therefore, in the view of the industry, the introduction of international standards in the issuance of financial bonds will help attract overseas investors to invest.

Sun Lin pointed out that with the accelerated opening of China's bond market, overseas investors' demand for domestic bond investment has continued to grow. According to her, in 2020, foreign institutions will increase their holdings of China's bonds by 1.03 trillion yuan, double the second highest level in 2018, the highest in history, "it is expected that there will be a very large growth in 2021.".

"A lot of overseas funds are invested in bonds, and many have their own themes and special needs, such as green bonds and" carbon neutral "bonds. The domestic bond market is becoming more attractive to overseas investors. At this time, it is of great significance for the opening of financial markets and the internationalization of RMB to provide "carbon neutral" bond investment targets that meet international standards Sun Lin said.

The "carbon neutral" financial bonds also set the "bond pass" attribute. Sun Lin pointed out that the establishment of "bond link" is to facilitate foreign investors to participate in bond investment and trading. "This time, carbon neutral financial bonds are in line with international standards. As far as we know, overseas investors have a high degree of recognition and interest in it. The establishment of" bond link "provides convenience in the channel."

It is worth mentioning that according to the reporter of 21st century economic report, the SSE will also issue the "carbon neutral" bond index for the first time with this issue of "carbon neutral" financial bonds as the main target.

Prior to this, China also released the CSI 300esg and CSI 800esg bond indexes. Sun Lin disclosed that the "carbon neutral" bond index released this time focuses more on the components of the low-carbon and energy-saving sectors of ESG, which can not only provide investors with investment tools in subdivided fields, but also promote the improvement of China's ESG index system.

China's green debt boom in 2021

On February 9, the first batch of "carbon neutral" bonds registered by China Southern Power Grid, Three Gorges group, Huaneng International, state power investment group, Sichuan airport group and Yalong River Hydropower were successfully issued, which opened the prelude to the issuance of China's "carbon neutral" bonds.

At present, in a short period of more than one month, 23 "carbon neutral" bonds have been issued, with a total issuance scale of 25.914 billion yuan. Among them, there are 11 carbon neutral corporate bonds with a fund-raising scale of 14.2 billion yuan, and 12 carbon neutral debt financing instruments with a fund-raising scale of 11.714 billion yuan, including medium-term notes and asset bills.

In 2015, the State Council issued the overall plan for the reform of ecological civilization system, putting forward the concept of "green bond" for the first time. In 2016, China's green bond market was officially launched. In the following five years, the annual issuance of green bonds has been maintained at about 200 billion yuan, which is relatively stable.

But in Sun Lin's view, 2021 will be the year when China's green bonds, especially "carbon neutral" bonds, burst out. "It is estimated that in 2021, the issuing volume may reach 500 billion to 800 billion yuan, which is the highest in history. Domestic green bond issuance is expected to account for more than 50% of the global total

Sun Lin pointed out that the issuance of green bonds will undoubtedly help reduce the financing cost of green projects of enterprises and promote the development of green industries. In addition, it can also promote the upgrading of enterprises and overall industrial institutions, and guide the flow of funds to industries with low energy consumption, low emission and low pollution. From the perspective of capital market, the issuance of green bonds will also drive financial institutions to establish investment and research systems of related industries, and cultivate domestic ESG investment groups and investment awareness.

Green debt needs supporting policies

Although the issuance of green bonds dominated by "carbon neutral" bonds is expected to break out this year, there are still many problems to be solved in the domestic green bond market.

Chen Jianheng, director of fixed income research of CICC, pointed out that at present, there are many policies on the issuance side of green bonds in China, but there is no supporting policy on the investment side. Therefore, whether it can effectively save the financing cost remains to be investigated. "From the perspective of other green bond issuance, no obvious effect of reducing financing cost has been found. In the current market where the assessment of issuers is still based on financing costs, whether or not to reduce the cost is still the fundamental to enhance the power of issuers. "

In addition, domestic ESG investment philosophy is relatively weak, and policy guidance is still needed in the future. Chen Jianheng said that according to the relevant reports of the fund industry association, domestic investors pay little attention to green bond investment, and the scale of Pan green fund products is small. From overseas experience, in the early stage of market development, it is still necessary to introduce relevant preferential policies to guide green bond investment. For example, the central bank takes green bond investment into consideration in the assessment and gives preferential treatment on some indicators, so as to cultivate the market and relevant investors.