CHINA GREEN BOND MARKET Newsletter
中国绿色债券市场季报
JANUARY-MARCH 2017 ISSUE 3 2017年1月-3月 总第3期

News and Events 新闻与活动
2nd Annual Green Bond Awards

Bond Index

In March, Climate Bonds, in partnership with
the City of London and the Green FinanceInitiative, held the 2017 Green Bond Awards
at the Guildhall. The Awards (and certificates)
recognise leading organisations, financial
institutions and governments, who have been
pioneers in the development of green financeand the green bonds market in the past year.

On 20th March, Luxembourg Stock Exchange(LuxSE) and Shenzhen Stock Exchange (SZSE)
jointly launched the China Green Bond IndexSeries with the Central University of Financeand Economics (CUFE). The index series will
be displayed on both LuxSE and SZSE and will
act as a market benchmark for the increasingly
mainstream green bond market in China. The
index series consists of three indices coveringboth labelled and unlabelled green bonds. The
annualised return of the High Grade Green
Bond Index since 2012 is 5.37%, the averageremaining maturity of the latest index samples
is 4.78 years, and the coupon rate is 4.4%.
Read more here.

Chinese Award-winners
LuxSEand Single
SZSE GreenlaunchBondthe– BankChinaof Green• LargestCommunications• Largest Overall Issuer – Shanghai
Pudong Development Bank
• Innovative Regulator – People’s Bank ofChina
Chinese Certificate-winners• The First Chinese Policy Bank Green
Bond Issuer – Export-Import Bank ofChina• Structured: First Dual Recourse Bond in
China – Bank of China• Certifications, Indices: First Unlabelled
Green Bond Index – China Central
Depository & Clearing Co.
• Market Infrastructure: Pioneer Listing
Rules – Shanghai Stock Exchange

At a GlanceTotal Q1 Chinese Issuance:
USD 2.47bn / RMB16.94bn
Issuance that meet international
definition:
USD 967m/RMB 6.6bn
Largest issuer: Chongqing Longhu
Largest issuing sector: Energy andTransport
Total Q1 Approved:
USD 3.34 bn/RMB22.32bn

PBoC and EIB announce a joint initiative topromote green finance

PBoC presents China’s experience on green
finance & green bonds to LATAM delegations

On 22nd March, The People’s Bank of China(PBoC) and the European Investment Bank (EIB)
launched a joint initiative to develop a clear
framework for analysis and decision-making
in green finance. By developing a common
language on green investment and improving
the consistency of green finance definitions,the initiative aims to help both Chinese andinternational investors make decisions andenhance investors confidence in green finance.

A delegation led by the InterAmerican
Development Bank visited the People’s Bank of
China in late March, seeking China’s experiencein developing a green bond market and green
finance. Dr. Ma Jun, Chief Economist of PBoC
Research Bureau, introduced China’s approachto green finance, and discussed how it has been
dealing with challenges that have arisen. SeanKidney, CEO of the Climate Bonds Initiative,
provided an update on global green bondmarkets and practice.

financial institutions including brokerages, fundmanagement companies and banks, to invest
in green bonds and encourage Shanghai and
Shenzhen stock exchanges to build up dedicatedgreen bond lists, indices and other instruments
to facilitate investment.

compensation mechanism, establishing a
resource/environment monitoring and alert
mechanism and launching pilot projects toimprove the national natural resource/asset
management system, etc.

Policy Update
China’s new green bond guidelines publishedby CSRC on 2nd March
China Securities Regulatory Commission(CSRC) has published new guidelines tosupport the issuance of green bonds. As themain regulator supervising China’s securities
market, CSRC oversees the issuing, trading,custody and settlement of equity shares,
bonds, and investment funds, etc.
With the PBoC’s guidelines regulating green
bonds issued by financial institutions andNDRC’s guidelines targeting green bonds
issued by non-listed corporates, the CSRC’s
new guidelines will apply to all type ofgreen bonds issued by any type of entities
in China. The guidelines adopt PBoC’sdefinitions on eligible projects and encourage

Green Finance and Ecological Protection written
into 2017 Government Work Report
China’s Prime Minister Li Keqiang presented the2017 Government Work Report at 12th National
People’s Congress, where he stressed that theXi administration will continue to make major
efforts to develop green finance. Meanwhile,
the government has promised to contribute tobiodiversity conservation and marine protection.
It will do so by reforming ecological protection,
improving the main functional zone and ecological

The Government Work Report works asa check list showing the government’s
work in previous year and plans for thenext to meet the goals of each Five-year
Plan. Even a small mention can signal a
significant development. This year’s reporton the government’s commitments to green
finance and environmental protection,
identifies
opportunities
thatgreen
bonds market in China could be further
enhanced to direct capital flow into green
assets and achieve the government’s
environmental aims.

PAGE 1Green Bond Discussion
What is a Green ABS?
On 30th March, Guiyang Transportation
Company was approved to issue a green assetbacked security (ABS) for RMB 2.65bn (USD390m). With this coming to market in the next
few months, total green ABS issuance in China
will increase to RMB 9.93bn (USD 1.4bn).
This also includes:• Wuxi Communications Industry Group:

RMB 1.98bn (USD 290m)• Xinjiang Goldwind: RMB 1.3bn (USD 190m)• Gezhouba Group: RMB 800m (USD 120m)• Industrial Bank: RMB 2.6bn (USD 212m).

ABS are bonds or notes backed by a pool ofunderlying small and liquid assets. On their own,
these assets are too small to gain access to thebond market, but can be aggregated into larger
pools to access institutional investor capital.
For green ABS, the underlying assets could bereceivables of loans (e.g. electric vehicle leases)or cash flows from small-scale low carbon
projects. As an example, Goldwind bundledreceivables of 5 wind farms in the next 5 years
as assets for its green ABS issuance.
The process of pooling these small assets intolarger financial instruments allows them to be
sold in the bond market to institutional investors.

During this process, a loan originator bundles
its cash-producing assets and sells them to a
special purpose vehicle (SPV) that issues theABS.
The asset-backed securities are only backed theunderlying asset pool and not by the balance
sheet of the issuer, meaning the SPV is protectedfrom potential bankruptcy claims on the issuingentity. Normally, the larger the asset pool, themore risk diversification.1
Click here to download CBI’s research on Green
Securitisation.
1. https://energy.mit.edu/wp-content/uploads/2016/07/MITEI-WP2016-05.pdf

Q1 Chinese Green Bonds Issuance
ISSUER

MARKETDATEISSUED AMOUNT**SECOND REVIEWER

RATING AGENCY

RATINGUSE OF PROCEEDS*

Hebei Financial
Leasing

China Interbank

23/01/2017

100m

EY

Chengxin Rating

AA+

Energy & Transport

Huarong Financial
Lease

China Interbank

15/02/2017

1bn

EY

Chengxin Rating

AAA

Mixed

China Interbank

15/02/2017

1bn

EY

Chengxin Rating

AAAMixed

China Interbank

17/02/2017

1.6bn

None

SBCRAAA

Low carbon buildings*

China Interbank

17/02/2017

1.44bnNone

SBCRAAA

Low carbon building*

China Interbank

07/03/2017

1bn

None

SBCRAAA

Low carbon buildings*

Wuhai Bank

China Interbank

21/02/2017

500m

China Credit Rating

Chengxin Rating

AA-Mixed*

China Development
Bank

China Interbank

23/02/2017

5bn

PWC

None

None

Mixed*

Agricultural
Development Bank

China Interbank

27/02/2017

4bn

CECEP

NONE

None

Adaptation

Dongjiang
Environment

Shenzhen Stock
Exchange

10/03/2017

600m

None

Chengxin Rating

AAMixed*Nantong Economics
and TechnologicalDevelopment
Zone Co.

China Interbank
PrivatePlacement

22/03/2017

300m

None

None

None

Not available

Chongqing Longhu* 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.
** In RMB unless otherwise specified.

JAN-MAR 2017 ISSUE 3PAGE 2Market Data 市场数据The growth of Chinese and global green bonds$30 bn• China Issuance(aligned with China’s green definitions)$25 bn• China Issuance(aligned with both China and international
definitions)$20 bn$15 bn• Other Countries Issuance(aligned with both China and international
definitions)$10 bn$5 bn• Approved Chinese Green Bond Issuance$0
Q1 2016

Q2 2016

Second party reviews of all
Chinese green bonds

Q3 2016

Q4 2016

Q1 2017Chinese green bonds issuancein different markets

China Credit
Rating 3%

Shenzhen 4%

Q1 Underwriters breakdown
AbbrevationsABC: Agricultural Bank of China
BOC: Bank of China
CDB: China Development Bank
CIC: China International Capital

None30%CECEP
24%

CITIC: CITIC Securities
CMB: China Merchant Bank
DS: Donghai Securitie

Q1

Q1

EXIM: Export-Import Bank of China
GF: Guangfa Securities

EY
13%

GJ: Guotai Junan Securities

PWC
30%

Individual issuer’s allocation ofproceeds according to PBoC’s Green
Bond Endorsed Project Catalogue

China Interbank
96%

Allocation of proceeds according
to CBI Taxonomy

Ecological Protection
and Climate Change 6%
CleanTransport
Energy Saving
9%
21%
Clean
Energy10%
Not Q1Pollution
SpecifiedPrevention
9%and Control
42%

Water 4%

ICBC: Industrial and Commercial Bank ofChina

GF 6%
GJ 3%
ABC 2%
Exim 2%ICBC 2%
CMB 2%DS 2%
CDB 2%IB 2%
BoC 0.2%

Energy25%

WasteManagement
23%
Q1

Transport
25%

IB: Industrial Bank

None
53%
EnergyEfficiency &Low Carbon
Buildings
23%

CIC
12%
CITIC
12%

Resource Conservation
and Recycling 13%

JAN-MAR 2017 ISSUE 3

PAGE 3

Individual issuer’s allocation of proceeds according to PBoC’s Green Bond Endorsed Project Catalogue• Refinancing

20%

Nantong Eco & Tech Dev Z• Ecological Protection andClimate Change Adaptation

40%

Wuhai Bank Co Ltd• Clean Transportation

Huarong Financial Lease

60%• Pollution Prevention andControlHebei Financial Leasing• Not SpecifiedDongjiang Enviroment• Clean Energy

Chongqing Longhu Develop

80%

China Development Bank• Resource Conservation
and Recycling

100%

Agricultral Development Bank China• Energy Saving0%

Chinese Green Bonds Approved in Q1

ReportENTITY BEING APPROVED TO ISSUE
GREEN BONDSAMOUNT
APPROVEDDATEAPPROVEDREGULATORYAUTHORITY*

GCL-POLY Holdings

1.75bnN/A

SZSE

CECEP WIND POWER

1bn03/01/2017

CSRC

State Grid Energy Development

1bn

06/01/2017

N/A

Liuyang Modern Manufacturing Industrial

1.8bn

18/01/2017

NDRC

Wuhan Metro

5bn

25/01/2017

NDRC

Tibet Urban Development and Investment

1.82bn07/03/2017

NDRC

Kaifeng Development Investment

1.3bn

14/03/2017

NDRC

Bank of Nanjing

5bn

15/03/2017

CBRC,PBOCBank of Luoyang

1bn

22/03/2017

PBOC

Guiyang-Pingan Green ABS

2.65bn31/03/2017

N/A* Abreviations: CBRC - China Banking Regulatory Commission; CSRC - China Securities Regulatory Commission; NDRC - National Developmentand Revolution Commission; PBOC - People’s Bank of China; SZSE - Shenzhen Stock Exchange.

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Study of China’s Local Government
Policy Instruments for Green Bonds
Jointly released by SynTao Green Financeand Climate Bonds Initiative at China’s
Green Finance Committee Annual
Conference 2017, this report provides
an overview of local government policy
instruments for developing the green
bond market in China.
It identifies the policy instruments at thedisposal of local governments based on
central government policy framework, andpresents successful and replicable casestudies and international experiences asreference for China’s future developmentin promoting green bonds.
Download in English or 下载中文报告Prepared by the Climate Bonds Initiative Markets Team
Source data from Wind, Bloomberg LLP and other parties. All figures are rounded.
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 orinvestment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.
The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, norshould any information in this communication be relied upon in making any investment decision.
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
an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

JAN-MAR 2017 ISSUE 3

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