Green Bond
Green Bond Market
The development in green bond regulation at the end of 2015 marked the beginning of the domestic green bond market in China. Since 2016, China has gradually become the dominant player in the global green bond market.
Overview of China green bond market in 2019
The latest details of China green bond market
We use the green bond data from Wind, as of the end of March 2021, there are 1,082 green bonds with a total outstanding amount of RMB 1.13 trillion.
Remaining tenor
More than 80% of China’s domestic market is composed of bonds with a term of up to 5 years.
Credit rating
More than 80% of China’s green bonds are rated AAA by Chinese domestic rating agencies except for the 16% that are not rated.
Coupon rate
The average coupon of China green bonds with a maturity from one to ten years is between 4.42% to 5.21%. The average rate for green bonds with a maturity over 10 years is slightly lower.
Issuer types
We can see developments in China’s profile of issuer types. The most noticeable is the strong growth in the total volume of green bonds issued by Non-Financial Corporates. Banks are still the largest issuers of green bonds.
The Green bond support project catalogue
As a result of the different focuses between domestic and international guidelines in guiding green investment and financing activities, there are differences in the criteria for identifying green bonds between China and international standards. But we can expect technical barriers will be solved according to the publishing of “The Green bond support project catalogue (consultation paper)” in 2020.
The 2020 version of the green bond catalogue divides green projects into six areas: energy conservation and environmental protection industry, clean production industry, clean energy industry, ecological environment industry, green infrastructure upgrade, and green service industry. The 2020 version of the catalogue has a total of 6 first-level catalogues, 25 second-level catalogues, 48 third-level catalogues, and 204 fourth-level catalogues.
We can see three major goals this catalogue may achieve:
- Integrate green bond standards with international standards. Previously, China included “clean coal utilization” into the category of clean energy. The 2020 version deleted a number of items directly related to fossil fuel in the catalogue. Excluding the clean utilization of coal can improve the internationalization of domestic green bond support project standards, attract more international funds to participate in China’s green bond market.
- More green industries and green-related projects are included in the new version of the catalogue, which means that more green projects will be labelled “green” and the scale of the green bond market will expand.
- The 2020 version of the green bond catalogue provides a detailed introduction to the green bond identification standards and third-party assessments, which can more effectively prevent the “greenwashing”.
Green bond indices
Currently, we can find 17 green bond indices offered by four major domestic index providers. Below is the list of existing green bond indices:
Green bond funds
As of the end of March 2021, there are only two green bond publicly offering funds in the market, one is the Fullgoal Green Pure 1 year Open Bond Fund with a total AUM of EUR 52 million, which was launched on 26 Jan 2018. The other one is CIB Green Pure Bonds 1year Regular Open Bond Fund launched on 17 July 2020 with a total AUM of EUR 216 million.
