China the largest green bond issuer in 2019: report

China cemented its position as a leading green bond market, with 386.2 billion yuan (US$55.8 billion) issued in 2019, according to a recent industry report.

The country’s total green bond issuance during the past year was up around one-third compared with 2018, said a study by Climate Bonds Initiative and the China Central Depository & Clearing Co Ltd Research Centre, with the support of HSBC.

China, the US and France led the annual country ranking once again by the total amount of labelled green bonds, which refer to bonds issued to fund projects related to environment protection.

Industrial and Commercial Bank of China was the largest issuer in 2019 with US$5.3 billion, plus an additional US$600 million green bond issued on the Hong Kong Stock Exchange through its subsidiary, ICBC Financial Leasing.

In the past year, non-financial corporates became the largest issuer type, with an increase of 54 percent year on year and representing over one-third of the total issuance volume.

The increase has outpaced financial corporates, which have dominated issuance since 2015, the report noted.

Around one fifth of green bonds were issued in the offshore market, with 15 issuers raising a total of US$12.5 billion, an increase of 30 percent year on year.

HKEX remained the largest listing venue for Chinese offshore green bonds, accounting for more than half of total offshore volume.

More than three quarters of the deals were denominated in US dollars (76 percent). The euro ranked second (12 percent), followed by the yuan (8 percent) and Hong Kong dollars (4 percent).

Transport was the most funded sector (35 percent) by offshore green bonds, closely followed by low carbon buildings at 32 percent. And low carbon transport and water infrastructure are the most funded project types.

Local government financing vehicles contributed US$6.2 billion to total issuance in 2019. On a cumulative basis, Guangdong, Anhui, Hubei, Jiangsu and Shandong are the top five provinces for green issuance.

Looking ahead, the government’s role in providing consistent and credible policy signals will continue to be paramount for the sustained and orderly growth of China’s domestic green bond market, the research said.

“The tremendous potential for China to become the global engine room in the 2020s for green finance is reflected throughout this report. Increased offshore issuance, harmonization and alignment is making the domestic market increasingly attractive to international investors,” said Sean Kidney, CEO of Climate Bonds Initiative.

The Climate Bonds Initiative, founded in 2009, is the only organization in the world dedicated to mobilizing the US$100 trillion bond market for climate change solutions.