Bonds May 18

China launches its first 'blue bond' 

Funds from the Pearl River Delta Water Resources Allocation Project Special Bond will be used to increase drinking water in southern China

China launches its first 'blue bond' 
The Hong Kong-Zhuhai-Macau Bridge is a 55km bridge-tunnel system, which consists of a series of three cable-stayed bridges and an undersea tunnel, plus three artificial islands that connect Hong Kong with Macau and Zhuhai across the Pearl River Delta. File photo from July 2018 by SK Hon/EyePress via AFP.

(ATF) China has launched its first ‘blue bond’ on the Shenzhen Stock Exchange, with an issuance amount of  2.7 billion yuan, a 10-year term, and an interest rate of 2.88%. 

It is titled the “2020 Pearl River Delta Water Resources Allocation Project Special Bond (Green Bond)".

China Financial Information Network said this is the first environmental special bond issued by the Guangdong Provincial Government, and the first one in the water resources field in the country.

Funds raised from the bonds will be used for the construction of the Pearl River Delta water resources allocation project. The involved is located in Nansha New District in Guangzhou.

The "Outline of the Guangdong-Hong Kong-Macao Greater Bay Area Development Plan" proposes to "accelerate the promotion of the Pearl River Delta water resources allocation project and the construction of a fourth water-supply pipeline in Macao, (to) strengthen the safety of drinking water sources and backup water sources, and the construction of environmental-risk-prevention and control projects. Water supply safety in the Pearl River Delta and Hong Kong and Macao are of vital importance."

China's environmental bond market has grown rapidly over the past four years, with annual issuance exceeding 200 billion yuan, making it the world's largest "green bond" issuer.

In the international market, such as the United States, Germany and Japan, the government green bond model is widely used.

However, in China, environmental bonds are still mainly issued by enterprises and financial institutions. The development of green special bonds with government credit is relatively slow, and cases are rare.

As reported by ATF recently, China recently announced plans to develop "blue bonds", with funds to be specifically used for water or maritime-related projects.

SEE ALSO: China to float new 'blue bonds's for better oceans