Wednesday, 16 June 2021

CCB launches a new index reflecting China’s green bond pricing

By Busch Pu

China Construction Bank teamed up with data provider Wind Info to launch the CCB-Wind Green ESG Bond Issuance Index. This will serve as a barometer for China’s growing green bond market.

  • CCB-Wind Green ESG Bond Issuance Index will help institutional investors grasp the price movements in the primary market of China’s green bond
  • The index was launched a month after China removed fossil fuel investments from updated green bond list
  • With $15.7 billion green bond issuance, China overtook the US as the biggest green bond issuer in the first quarter of 2021

China Construction Bank Corporation (CCB) partnered with Wind Information Co., (Wind Info) and the International Institute of Green Finance (IIGF) of the Central University of Finance and Economics to launch the CCB-Wind Green ESG Bond Issuance Index and Yield Curves in Beijing. The launch was held simultaneously in Luxembourg. The index is dynamically updated on the official website of CCB, Wind Info terminals, and the Luxembourg Stock Exchange to help domestic and foreign market participants grasp the movements of China's green bond market in real-time.

An index to reflect price movements in China’s green bond

Against the backdrop of a transition to a green and low-carbon economy and society, CCB, the largest lead underwriter of credit bond issues in China's interbank market (CIBM), has collaborated with Wind Info, China's largest data information provider and roped in IIGF, which has rich research experience in the field of green finance, to launch the index.

It is the first green bond issuance index in Chinese bond market that integrates environmental, social and governance (ESG) and carbon neutral concepts, as well as three primary market yield curves of China’s green bonds, carbon neutral bonds, and ESG bonds. The base date of the index is 1 July 2019. In same year, China issued a record $32.9 billion of green bonds, according to Climate Bonds Initiative (CBI).

Wang Hao, executive vice president of CCB, at the launch said, “Taking reference from domestic and international standards for green and ESG bonds, the index will provide international and institutional investors with a more intuitive and accurate instrument that is quantifiable and comparable”. “It will deepen international investors' understanding of China's high-quality corporate green bond issuers, guide more proactive allocation of global funds to the country's green assets, and accelerate international cooperation of green capital markets,” Wang added.

China aligns green bond to international standards by excluding fossil fuel investments

Wang Xin, director-general of People’s Bank of China’s (PBoC) Research Bureau, expects the launch of the index will send a positive message to the market. The launch  took place only month after the central bank upgraded its green bond list. PBoC in April released The List of Project Supported by Green Bonds (2021), a list of projects considered eligible for green bond financing in China. One notable change was the removal of the controversial “clean coal use” and other fossil fuel investments. Investors applauded this further alignment with international standards. The latest catalogue will take effect on 1 July and replace the one published in 2015.

Wu Xiaolong, vice general manager of Investment Banking Department of CCB, told The Asian Banker, “The well-known pledge by President Xi Jinping is to ensure that China will realise its goal of carbon emissions peak in 2030 and carbon neutrality in 2060. Green finance and carbon neutrality have become a continuing national strategy to China”. “Being in the capital and direct financing markets, we are keenly aware of the immense efforts that have been made in implementing the environmental protection and carbon neutral strategy since the beginning of the year,” Wu added.

China green bond market is growing fast in recent years

China has developed a robust green bond market in recent years. With RMB 116.8 billion ($17.7 billion) issuance, China overtook the US to become the biggest green bond issuer in the first quarter of 2021, according to Reuters. By the end of 2020, the volume of labelled green bonds issued in the country exceeded RMB 1 trillion ($155.3 billion), while the volume of unlabelled green bonds hit RMB 10.32 trillion ($1.6 trillion). The money invested in green projects reached RMB 6.12 trillion ($0.95 trillion), according to the IIGF.

This is a sponsored article and does not necessarily reflect the opinion of the publisher.

Keywords: Clean Enerygy, Sustainable Finance, Green Bond Market, Carbon Emissions, ESG, Green Investments
Institution: China Construction Bank, People's Bank Of China, Wind Info
Country: China
Region: East Asia
Guest: Wu Xiaolong, Wang Hao
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