July 16, 2015 / 8:49 AM / in 5 years

Wind power firm to issue China's first Green bond

HONG KONG, July 16 (IFR) - A manufacturer of wind turbine generators on Thursday began marketing China’s first bond issue conforming to the Green bond principles, opening another financing channel for Chinese environmental initiatives.

The planned USD300m 3-year bond issue by Xinjiang Goldwind Science & Technology would be the first Green bond issue from a Chinese issuer, following similar Asian offerings in India, Taiwan, Australia and South Korea.

The People’s Bank of China and the United Nations Environment Programme published a joint report in April on the establishment of a green financial system in China that called for the use of green bonds among a diverse range of financial products.

Analysts see a vast potential for these instruments as China works to clean up its environment.

“If China can unlock climate financing, including Green bonds, there is clearly huge potential for that market,” Samantha Sutcliffe, Green bonds principal for Asia & the Middle East at SEB, told IFR in an interview earlier this month.

However, HSBC climate change strategist Wai-Shin Chan cautioned that “we have not seen bottom-up demand in China, so the government needs to incentivise issuers and investors with appropriate regulation”.

China’s central bank is working on a draft framework for Green bonds in the domestic market and may consider introducing various inducements such as tax breaks, industry sources said.

Bank of China, Deutsche Bank and Societe Generale are joint lead managers for the Xinjiang Goldwind Reg S offering, which is marketed with an indicative yield of around 180bp over US Treasuries and will be backed by a standby letter of credit from Bank of China’s Macau branch.

Xinjiang Goldwind develops and manufactures wind turbine generators and invests in wind farms. Independent adviser DNV GL has stated that the issue conforms to the Green bond principles. (Reporting By Frances Yoon; Additional reporting by Steve Garton; Editing by Vincent Baby)

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