China Green Bond Market Q3 Report 2017中国绿色债券市场2017季报
JULY - SEPTEMBER 20172017年7月至9月

Market Overview
China Green Bond Market was up 13% qoq in
2017Q3: As of the end of September, China’s
green bond issuance year-to-date totaled USD
20.91bn (RMB 141.87bn), which represents
11.2% increase compared to the first 9 monthsof 2016 and more than 23% of global green
bonds. In Q3 this year, China green bondmarket gained further momentum, bolstered bycity commercial banks and local government
investment and financing vehicles, the issuanceamounted to RMB62.36bn, up 13% qoq, making
the largest quarterly issuance of the year, with
38 issuers in the market issued 43 green bonds.
Albeit seeing more green bonds issued in
Q3, the percentage of internationally-aligned
Chinese labelled green bonds slipped to 63.5%,
vis-à-vis 78.2% in the first half of this year. Thiswas mainly due to the fact that quite a numberof the green bond issuers allocate more than
5% of proceeds to finance working capital
expenditures, which are acceptable under the
relevant guidelines set forth by the National
Development and Reform Commission (NDRC),
nevertheless, according to the Climate Bonds
Standard, these bonds are not defined as green
and thus ineligible for inclusion in the green
bond list.
All investment-grade with more diverse
notches: Except for privately placed debt
financing tools and subprime asset-backed
securities where publicly available information
is limited, green bonds issued in the third
quarter of 2017 were all rated A+ or above,and prime-rated (AAA) bonds made up thelargest proportion (59%) of total issuance.
Nonetheless, more diversity on green bondratings in the third quarter is observed - while
AAA-rated bond issuance dropped 21.26
percentage points, AA-rated bond issuance
moved up 25.15 percentage points, as opposedto the first 6 months this year, and accounted
for 34.92%, indicating that more local issuers
as well as small and medium-sized issuers areentering China’s green bond market.
More long-term Chinese green bonds
emerged: 84% of Chinese green bonds havetenor from 1 to 7 years - in the third quarterof 2017, tenor of Chinese green bonds ranged
from six months to 15 years, of which 3-year
and 7-year bonds took up the largest batches,
accounting for 44.82% and 21.29%. There wasan increase in long-term green bond issuancein the quarter, almost RMB 6bn or 10% of thegreen bonds have 10-year tenor or above, andthere were two 15-year green bonds issued,
with a total of RMB 5bn.

Majority of green bonds issued at a higher
cost than their non-green equivalents: Basedon like-for-like comparison of bonds having thesame ratings, same tenor, same type and sameissuance time, excluding privately placed debt
financing tools and subprime asset-backed
securities where publicly available information
is limited, it is found that 77% of the green
bonds were issued at a higher cost of funding
than their comparable non-green equivalents,
only 23% of issuance enjoyed a lower pricing.
57% of issuance received second party
reviews: Less issuance went for second opinion
in the third quarter, the ratio fell 26 percentage
points from the first half (83%), in part because
of inadequate disclosure from green bondissuers. A second party opinion is an assessmentof the green credentials of a bond provided by anorganisation with environmental expertise andcommissioned by the issuer. External reviews ofgreen bonds are intended to provide investors
with confidence in the issuer’s claims on theenvironmental credentials of the bond.

At a Glance
Total Third Quarter Chinese Issuance:
USD 9.38bn / RMB 62.36bn
Issuance that meets international
definitions:
USD 4.31bn/RMB 28.73bn
Largest issuer: Wuhan Metro
Largest issuing sector: Transport
Total Third Quarter Approved:
USD 4.41bn/RMB29.31bn
Total Year-to-date Chinese
Issuance: USD 20.91bn/RMB
141.87bn
Issuance that meets international
definition:
USD 13.12bn / RMB 89.96bn

China Green Bond Issuance• China Issuance-aligned with international definition• Global issuance-aligned with international definition (except China)• China Issuance not aligned with international definition$40 bn$30 bn$20 bn$10 bn$02016 Q42017 Q1

2017 Q2

2017 Q3

PAGE 1

News and Events
Local governments actively promote green
financial reform and establish innovation
pilot zones: Subsequent to the State Council’s
decision in June to set up pilot zones in 5
provinces to promote green finance, different
pilot zones announced one after the other in thethird quarter the experimental programs or to-do
lists on developing green loan, green bonds,
green insurance and accelerate the constructionof multi-level green financial system. Guian New
District in Guizhou Province, Huadu District inGuangdong Province and also Jiangxi Province
has either laid out reform tasks or signalled topush ahead green financial system construction.
Release of Xiongan New District Green
Financial Planning Report: On August 19, thethen Chief Economist of the People’s Bank of
China Research Bureau Ma Jun announced in
the second “Tianjin Green Finance Forum” therelease of the “Xiongan New District Green
Financial Planning Report.” The report puts
forward the concrete idea of green financedevelopment, and points out that the choiceof financing channels available to Xiongan
includes policy and commercial loans, bonds,
trusts, finance leasing and equity financing.
Nine local government bonds included in the
ChinaBond Green Bond Indices: On August 31,
CCDC announced that nine local government
bonds were included into their ChinaBond
China Green Bond Index and ChinaBond China
Green Bond Selected Index. It was based on
publicly available information, and outstanding
bonds which are green in nature were identified.
Through this, CCDC hopes the indices canreflect the performance of the green bondmarket more comprehensively, entice the local
governments to be more actively involvedin green project investments, and promote
the improvement of quality of environmental
disclosure in the bond market.

was sold to retail investors through outlets
and electronic channels of Industrial andCommercial Bank of China, Agricultural Bank of
China and Bank of China. This is a breakthroughthat helps not only broaden the public
participation in green investment channels andamplify the social impact of green finance, butalso helps to establish an innovative, safe andstandardised channel for the development ofgreen finance and inclusive finance, giving a
positive meaning to green finance development.
Shanghai Stock Exchange and Luxembourg
Stock Exchange tightened partnership topromote green bonds: On September 28, theShanghai Stock Exchange and the Luxembourg
Stock Exchange signed a memorandum ofcooperation in Shanghai. In the future, the twobourses will strengthen further cooperationin the field of green bonds, particularly on
increasing market transparency through green
bond information display and so on.

The fifth national financial work
conference encourages thedevelopment of green finance.
The two-day national financial work
conference was held in Beijing from
July 14 to July 15.
Chinese President Xi Jinping attended
the meeting and delivered the keynote
speech. He stressed that financial
sector is the facilitator of real economy.
China needs to build an inclusive
financial system, and to encourage thedevelopment of green finance.

Green Bond Discussion
Call for better environmental disclosure on
local level green bonds
In the third quarter, China saw rapid expansionof green finance from state to local level,
and the growing trend of local green project
financing through debt capital markets,
evident by a surge of City Commercial Banksand Local Government Financing Vehicles(LGFV) tapping into the market.
While it is important to draw a line between
LGFV and sub-sovereign agencies, we expect
to see cities and sub-sovereigns increasingly
turning to the green bond market, and thatsovereign or sub-sovereign issuance to fuelChina’s market momentum going forward.

2017 China-UK Green Finance Forum: On
September 4, China-UK Green Finance Forumwas convened in Beijing to review the main
research achievements of the China-UK Green
Finance Task Force Workstreams, and also
discuss future collaboration, as a part of the 9th
China-UK Economic and Financial Dialogue.
The Task Force interim report Globalising Green
Finance: Turning Green Momentum into Actions
was released at the Forum. The China-UK Green
Finance Task Force, established by Green FinanceCommittee of China Society for Finance andBanking and the City of London’s Green FinanceInitiative, is tasked with increasing financial
cooperation between the two nations andgrowing green investment and opportunities.

As Climate Bonds Initiative noted in theBonds and Climate Change: State of theMarket 2017” report,

The first retail green bonds on sale: On
September 12, China Development Bank issued
green financial bond in support of the “Yangtze
River Economic Zone Water Resources
Protection”. The issuance size was RMB 5bn, of
which RMB 4.4bn was issued in the interbank
bond market and the remaining RMB 600mn

We also see the need for better disclosure on
use of proceeds and environmental benefitsof bond issuance.

JUL-SEP 2017

Policy Update:
China

in China, 90% of climate-aligned bonds
in China (bonds with proceeds used forclimate-resilient projects but have notyet been labeled as ‘green’) were issued
by entities backed by the sovereign or
sub-sovereign government. Apart from
Government’s commitment to a green
economy in China’s 13th Five Year Plan,
there have been a number of regulatory
developments that are also supportiveof a green financial system and green
infrastructure projects have been planned inline with these policy directions.

would include nine local government bondsin their ChinaBond China Green Bond Index
and ChinaBond China Green Bond Selected
Index. The newly added constituents arefrom Chongqing, Ningxia, Hubei, Yunnan and
Xiamen, with total issuance of RMB 26bn.
The nine local government bonds raised
funds and invested in areas including
municipal infrastructure, road and bridge,
land reserves, agriculture, forestry and water
conservation, transportation, ecologicalconstruction and environmental protection,
which are public welfare facilities generating
certain level of return. The corresponding
green projects are mainly pollution
prevention, transportation, ecologicalprotection and adaptation to climate change.
However, throughout the identification
process, it is found that in terms ofenvironmental disclosure on special bonds,
there is still room for local government toimprove. There are huge discrepancies in
the level of disclosure on underlying projects
information, and the absence of disclosure
about quantitative indicators of the projects.
In order to further improve the quality andstandardization of environmental information
disclosure of green bonds, it is crucial to
study and enhance the environmental impact
indicator system of green projects.

China Central Depository and Clearing(CCDC) announced in late August that they

PAGE 2

Market Data
Second party reviews

China green bond issuance by markets
BV 4%
CECEP 4%LIANHE CHIDAO 3%ZHOGCAI LVRONG 2%
KPMG 2%
Syntao Green Finance 1%

Shenzhen Stock Exchange 1%

ShanghaiStock
Exchange
25%

PWC
8%

N.A.
44%

China Bond
Rating9%

China
Interbank
74%

EY
23%

Allocation of proceeds according to PBoC’s Green Bond Endorsed
Project Catalogue

Allocation of proceeds according to CBI Taxonomy

Not available 7%

Waste
management
8%

Energy saving 4%

General use
or refinancing
14%

Ecologicalprotection andclimate change
adaptation 12%

Cleanenergy24%

Energy efficiency or
Low carbon buildings 4%

Adaptation
8%

Pollution
prevention
and control
18%

Clean
transport
16%

Water
29%

Energy22%

Transport
29%

Resource conservation& recycling 5%

Chinese green bond market recorded 33% growth in the first half of 2017
• Energy• Transport• Waste Management• Adaptation• Energy Efficiency Or Low Carbon Buildings• Water

100%
80%
60%
40%
20%

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PAGE 3Green Bond Issuance in Third Quarter 2017
ISSUER

MARKETDATEISSUEDSECOND REVIEWER

RATING AGENCY

RATINGUSE OF PROCEEDS*AMOUNT(RMB)
BAIC Motor

China Interbank

04-07-2017

2.3bn

N/A

Dagong

AAA

Transport

Yiwu State Owned Asset

China Interbank

13-07-2017

800mn

China Bond Rating

China Chengxin

AA+

Adaptation

Wuhan Metro

Shanghai

18-07-2017

1.5bn

N/A

China Chengxin

AAATransport

China Interbank

25-07-2017

2bn

China Bond Rating

China Chengxin

AAATransport

China Interbank

22-08-2017

3bn

N/A

China Chengxin

AAA

Clean Transport *Danyang Investment
Group

China Interbank

18-07-2017

1.5bn

N/A

China Chengxin

AAA

Pollution Prevention

Nanjing Fullshare Industrial

Shanghai19-07-2017

2bn

BV

N/A

N/A

N/A

Shanghai

08-09-2017

500mn

BV

N/A

N/A

N/A

Bank of Changsha

China Interbank

20-07-2017

3bn

EY

Lianhe Zixin

AA+

Mixed

China HuadianShanghai

20-07-2017

1.5bn

N/A

Lianhe Zixin

AAA

Clean Energy*

Shenzhen

18-08-2017

1.5bn

EY

Lianhe Zixin

AAA

Clean Energy*

Jingjiang Binjiang
New Town Investment
Development

China Interbank

25-07-2017

970mn

N/A

Lianhe Zixin

AAA

Ecological Protection
and Climate Change
Adaptation

China Longyuan PowerGroup

China Interbank

01-08-2017

3bn

N/A

DagongAA

EnergyJiangsu Hongzehu
Shenzhou Tourism
Development

China Interbank

01-08-2017

1bn

N/A

China Chengxin

AA

Ecological Protection
and Climate Change
Adaptation

Qingdao Rural Commercial
Bank

China Interbank

01-08-2017

1bn

KPMG

Lianhe Zixin

AA+

Mixed

GCL Power Group

China Interbank

03-08-2017

375mn

N/A

N/A

N/A

EnergyGezhouba Huanjia(Dalian) Renewable
Resource

Shanghai

03-08-2017

1.304bn

N/A

N/A

N/A

Clean Energy*

Liuyang Modern
Manufacturing
Construction Investment
Development

China Interbank

10-08-2017

900mn

N/A

Lianhe Zixin

AA+

Resource Conservation
and Recycling

Leshan City Commercial
Bank

China Interbank

11-08-2017

2bn

China Bond Rating

Lianhe Zixin

AA*

China Interbank

11-09-2017

1bn

China Bond Rating

Lianhe Zixin

AA

Mixed*

China Three Gorges

China Interbank

15-08-2017

3.5bn

EY

China Chengxin

AAA

Clean Energy*

Tianjin SDIC JinnengElectric Power

China Interbank

15-08-2017

200mn

Lianhe Chidao

Lianhe Zixin

A-1

Clean Energy*

Guangdong Nanhai Rural
Commercial Bank

China Interbank

16-08-2017

300mn

CECEP

Lianhe Zixin

AA+

Mixed

Hebei Financial Leasing

China Interbank

18-08-2017

500mn

EY

China Chengxin

AA+

Mixed

Qidi Holdings

Shanghai

18-08-2017

350mn

N/A

China Chengxin

AA+

EnergySichuan Naxing Group

China Interbank

18-08-2017

1bn

N/A

Other

AA+

N/A

Beijing Jingyushun
Environmental Protection

Shanghai23-08-2017

820mn

Syntao Green Finance

China Chengxin

AA+

Water

Shaanxi Xixian Xinqu
Fengxi Development andConstruction

China Interbank

23-08-2017

1.5bn

N/A

Dongfang Jinchen

AA

Mixed

Guangdong Huaxing Bank

China Interbank

25-08-2017

2bn

CECEP

China Chengxin

AA

Mixed

Inner Mongolia M-Grass
Ecology And EnvironmentGroup

Shenzhen

01-09-2017

250mn

LianheLianhe Zixin

AAA

Ecological Protection
and Climate Change
Adaptation

Guangzhou Development
Group

China Interbank

06-09-2017

2.4bn

N/A

China Chengxin

AAA

EnergyXuzhou Economic andTechnology Development
Zone State-Owned Assets
Management

China Interbank

06-09-2017

500mn

Zhongcai Lvrong

DagongAA

Ecological Protection
and Climate Change
Adaptation

Bank of Zhengzhou

China Interbank

07-09-2017

3bn

EY

China Chengxin

AAA

Mixed

CECEP Wind Power

Shanghai

07-09-2017

300mn

CECEP

Dagong

AAA

EnergyHuishang Bank

China Interbank

08-09-2017

1bn

EY

Lianhe Zixin

AA+

Waste

Note: * The CBI Taxonomy excludes clean coal projects, although they are eligible under the China Green Bond Endorsed Project Catalogue. Also, large hydropower projects
are currently excluded from our taxonomy due to issues of reservoir emissions and other social and environmental impacts. There may be scope to include these in the
future but more research will be required from our recently convened technical working group.
**Policy banks effectively act as agents of the state, notwithstanding the issuance didn’t seek a credit rating, it is deemed equivalent to AAA.

JUL-SEP 2017

PAGE 4

Green Bond Issuance in Third Quarter 2017 continued
ISSUER

MARKETDATEISSUEDSECOND REVIEWER

RATING AGENCY

RATINGUSE OF PROCEEDS*AMOUNT(RMB)
Kaifeng Development
Investment

China Interbank

08-09-2017

1.3bn

N/A

DagongAAA

Ecological Protection
and Climate Change
Adaptation

Bank of Dongguan

China Interbank

12-09-2017

2bn

EY

Lianhe Zixin

AA+

Mixed

Qingdao Tgood Electric

Shenzhen

14-09-2017

983mn

China Chengxin Int’l

China Chengxin

A+/AAA

Transport

China Development Bank

China Interbank

15-09-2017

5bn

PWC

N/A

None**

Water

Nantong Eco & Tech
Development Zone

Shanghai15-09-2017

510mn

Zhongcai Lvrong

N/A

None

Water

CGN Wind Energy

China Interbank

18-09-2017

1bn

Lianhe Chidao

Lianhe Zixin

AAA

EnergyPingxiang Huifeng
Investment

China Interbank

21-09-2017

2bn

N/A

Other

AAA

Ecological Protection
and Climate Change
Adaptation

Shanxi Jinmei Huayu Coal
ChemicalShanghai26-09-2017

800mn

N/A

N/A

N/A

N/A

Note: * The CBI Taxonomy excludes clean coal projects, although they are eligible under the China Green Bond Endorsed Project Catalogue. Also, large hydropower projects
are currently excluded from our taxonomy due to issues of reservoir emissions and other social and environmental impacts. There may be scope to include these in the
future but more research will be required from our recently convened technical working group.
**Policy banks effectively act as agents of the state, notwithstanding the issuance didn’t seek a credit rating, it is deemed equivalent to AAA.

Financial Institutions, Industrial and Utilities companies
are the largest issuers*
SECTORSISSUANCE SIZE
(BN, RMB)% OF
ISSUANCE

NO. OF
BONDS

% OF
BONDS

FINANCE

208

33.35%

12

17.14%

INDUSTRIAL

188.7430.27%

36

51.43%UTILITIES

151.0524.22

1318.57%

MANUFACTURING

32.83

5.26%

5

7.14%

PROPERTY

25

4.01%

2

2.86%

ENERGY

8

1.28%

1

1.43%

TOURISM

10

1.60%

1

1.43%

TOTAL

623.62100.00%70

100.00%* According to the CCDC’s classification, ABS are separately counted.

JUL-SEP 2017

PAGE 5

Approved Green Bonds in the Third Quarter 2017
ISSUER

Amount approved (RMB)

Approval Date

Regulatory Authority

Qidi Holdings

1.5bn

Jul-2017

SSE

Gezhouba Xinye Renewable Resource Co. Ltd. & Gezhouba Huanjia(Dalian) Renewable Resource Co. Ltd.

1.304bn

05-07-2017

SSE

Risen Energy Co., Ltd.

650mn

06-07-2017

CSRC

Shanxi International Energy Group2bn

07-07-2017

CSRC

Tianjin SDIC Jinneng Electric Power Co. Ltd.

1bn

20-07-2017

NAFMII

Guangdong Nanhai Rural Commercial Bank

1.5bn

20-07-2017

CBRC, PBOC

Zhongmin International FinanceLeasing Co. Ltd.

1bn

Aug-2017

SSE

Nantong Economic & Technological Development Zone Corporation

510mn

Aug-2017

SSE

Bank of Dongguan

4bn

03-08-2017

CBRC, PBOC

Inner Mongolia M-Grass Ecology And Environment Group

250mn

11-08-2017

CSRC

Xuzhou Economic and Technology Development Zone State-Owned
Assets Management Co. Ltd.

500mn

22-08-2017

NAFMII

Tianjin Union Electronic Technology Co. Ltd.

800mn

24-08-2017

NAFMIICGN Wind Energy Co., Ltd.

2bn

24-08-2017

NAFMII

Shandong Lipeng Co. Ltd.

600mn

Sep-2017

SZSE

China Jushi Co. Ltd.

700mn

19-09-2017

NAFMII

Yangzhong Construction Investment Development General Company

2bn

30-09-2017

NDRC

Anji County Urban Construction Investment Group Co. Ltd.

1bn

30-09-2017

NDRC

Bank of Lanzhou

3bn

N/A

CBRC, PBOC

Yantai Bank

5bn

N/A

CBRC, PBOC

Reports
Bonds and Climate Change: State of the Market 2017The ‘Bonds and Climate Change: State of the Market
2017’ report is an in-depth analysis of the climatealigned and labelled green bond markets. The Reportquantifies all bonds where proceeds are being used tofinance low carbon and climate resilient infrastructure.
Download the report.

Follow us

GREEN BOND PRICINGIN THE PRIMARY MARKET:Green Bond Pricing in the Primary Market: April June 2017:

Q2
2017

April – June 2017

0.5
0.4
0.3
0.2
0.1
0.0
-0.1

Report highlights-0.2• Includes USD and EUR green bonds issued
Q2 2017• Pool of issuers continues to expand• Issuers can access a broader investor base
• 54% of green bonds allocated to dedicatedgreen bond investors• Oversubscription and tight pricing arefeatures of the bond market and extend togreen bonds• EUR Corporate credit performs particularly
well in the secondary market

-0.3
-0.4
0

1

2

3

4

5

6

With support and funding from Pax World Mutual Funds, Obvion Hypotheken
and Rabobank
Prepared jointly by the Climate Bonds Initiative
and the International Finance Corporation

Additional funding was received from the Ministry of Finance of Japan and theGovernment of the Kingdom of Denmark through the Ministry of Foreign Affairs

Green Bond Pricing in the Primary Market: April – June 2017

1

7

8

Our Quarterly comparison between the behaviourof selected green and vanilla bonds in the primarymarket continues. The data sample expands further
with the second report of the Green Bond Pricing in
the Primary Market series. Download the report.

This report is also available in Chinese您也可获取本报告中文版

This report produced in partnership with China Central Depositing and Clearing Co. (CCDC) ©Climate Bonds Initiative & CCDC October/November 2017 Designed by Godfrey Design
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or
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The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken
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Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its
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A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of
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JUL-SEP 2017

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