CSSC (Hong Kong) Shipping, the leasing arm of state-owned China State Shipbuilding Corp, has raised $500m via selling green bonds with a rare “blue” notation.
The Hong Kong-listed lessor said it sold the five-year, guaranteed notes to offshore investors in coordination with 12 Chinese and foreign financial institutions.
“We will use the money to improve energy efficiency, control pollution and develop low-carbon and clean fuels as well as sustainable shipping,” it said.
The bonds are issued under the International Capital Market Association’s Green Bonds Principles. They also have the green and “blue” notations from the Hong Kong Quality Assurance Agency.
Blue bonds refer to green bonds whose proceeds are used to protect the ocean environment.
“Getting the dual notations is an important step for our green development as we look into research and development projects related to green vessels and ocean energy,” CSSC Shipping said.
Bank of China (Hong Kong), CCB International, CLSA, DBS Bank, ABC International, Bank of Communications, CMB International, CNCB Capital, Credit Agricole, Haitong International, Shanghai Pudong Development Bank and SPDB International have participated in the bond issue.
The notes are priced at the five-year US Treasury bond yield plus 145 basis points, or an interest rate of 2.1% per year. This was 40 basis points lower than the initial guidance.
The offering price will be 99.67% of the principal amount. CSSC Shipping, which plans to list the bonds on the Hong Kong Stock Exchange, said: “The issue was five times oversubscribed during the peak as investors recognised our business performance.”
Fitch Ratings has assigned an A rating for the dollar-denominated notes.
China interest
With more investors focusing on environmental, social and governance standards, Chinese leasing houses have been increasingly tapped into green and sustainable financing.
Previous issuers in this area included ICBC Leasing and Bank of Communications Financial Leasing.
China has aimed to reach peak CO2 emissions by 2030 and become carbon neutral by 2060. The European Union and International Maritime Organization are also ushering in new regulations to decarbonise shipping in the coming years.
“We are trying to meet the demand for smart, eco-friendly vessels so we can meet decarbonisation targets,” CSSC Shipping said.
