China raises $886 million with first sovereign green bonds in Hong Kong

China has successfully launched its inaugural sovereign green bonds in Hong Kong, securing 6 billion yuan (approximately $886 million). This significant financial operation is earmarked to support the nation's climate change mitigation efforts and bolster its economic footprint in key offshore debt markets.

The issued bonds are specifically designed to fund projects with positive environmental impacts. These include initiatives aimed at reducing greenhouse gas emissions, conserving biodiversity, and controlling pollution across vast territories. The Ministry of Finance confirmed that the proceeds will directly finance the government's strategic ecological spending outlined in its national budget.

The issuance was strategically divided into two equal tranches of 3 billion yuan each. The three-year bond offers a coupon of 1.42% and matures on June 4, 2029, while the five-year bond provides a slightly higher yield of 1.56%, maturing on June 4, 2031. The operation was facilitated by HSBC.

This move is a crucial step in China's strategy to develop its offshore yuan debt market. This "offshore" market, outside mainland China, is vital for attracting substantial foreign capital. The "very positive response" from investors, according to HSBC's David Liao, underscores strong international confidence in China's economic growth potential.

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the "very positive response" of the investors reflects contundently the "strong confidence of the international market in the enormous potential for growth and development of the Chinese economy"