On May 31st, China's green bond market has continuously diversified from zero scale to the world's largest green bond market. Recently, China Power Investment Ronghe Financial Leasing Co., Ltd., the first domestic interbank and exchange market financing lease green bond (PPN) underwritten by Industrial Bank, successfully issued a non-public targeted debt financing tool in 2017.
It is reported that the registered amount of this bond is 2 billion yuan, with an initial issuance of 1 billion yuan. All funds raised will be used for clean energy leasing projects such as wind, hydro, and solar photovoltaic power generation. Compared with traditional thermal power projects, the current bond fundraising project can save about 774000 tons of standard coal per year, equivalent to a reduction of about 2.068 million tons of carbon dioxide emissions.
According to Lin Shu, General Manager of the Investment Banking Department of Industrial Bank, this bond issue adopts the PPN model, which not only reduces the threshold for enterprises to participate in green projects, but also expands the scope of enterprise registration of green bonds. The process required for bond registration is relatively simplified, and the use of non-public targeted issuance has advantages in introducing risk preference investors and building a diversified investor group, which is conducive to resolving the financing difficulties of various enterprises and providing greater space for their green development.
Although China's green bond market started relatively late, its scale has developed rapidly under the increasingly perfect top-level design. In 2016, the issuance volume reached 238 billion yuan, accounting for 39% of the global issuance volume, making it the world's largest green bond market.
As a pioneer in green finance in China, Industrial Bank is also at the forefront of the market in the field of green finance bonds. Since 2015, the bank has successively issued the first domestic green credit asset-backed security, landed the first domestic green financial bond, registered and issued the first national green long-term equity medium-term note, and invested in the first domestic non listed company's green asset securitization product.
According to experts from the OECD (Organisation for Economic Co operation and Development), global green bond issuance currently accounts for only 0.2% of bond issuance, and there will be dozens of times more growth potential in the future. However, due to the strong externalities of green projects, green bonds have problems such as low commercial returns and insufficient attractiveness. Regarding this, Lu Zhengwei, an economist at Industrial Bank, suggested that firstly, the priority debt repayment status of green bonds should be clarified to reduce credit risk and support green development; Secondly, a lower risk weight should be set for green financing to reduce the cost of green financing.