China aims for green bond ex­pan­sion with Shang­hai bourse trial

The Pak Banker - - 6BUSINESS -

BEI­JING: China took an­other step to­ward ex­pand­ing fi­nanc­ing for clean en­ergy and en­vi­ron­men­tal pro­tec­tion with plans for a pi­lot pro­gram for green cor­po­rate bonds to be traded on the Shang­hai stock ex­change.

Un­der the trial, is­suers are re­quired to dis­close de­tails of projects that they will in­vest in us­ing pro­ceeds, ac­cord­ing to a state­ment Wed­nes­day on the ex­change web­site. The bourse will en­cour­age firms to get in­de­pen­dent pro­fes­sional as­sess­ment on whether the projects qual­ify as green, ac­cord­ing to the state­ment. It also will en­cour­age fi­nan­cial in­sti­tu­tions, bro­ker­ages, pen­sion funds and other in­sti­tu­tional in­vestors to in­vest in the se­cu­ri­ties.

Pres­i­dent Xi Jin­ping has vowed to cut pol­lu­tion and shift the world's se­cond-largest econ­omy to­ward greater fo­cus on con­sump­tion and ser­vices rather than tra­di­tional smoke­stack in­dus­tries. Shang­hai Pudong De­vel­op­ment Bank Co. in Jan­uary raised 20 bil­lion yuan ($3 bil­lion) in the first green bond in China's in­ter­bank mar­ket. Agri­cul­tural Bank of China Ltd. is­sued 600 mil­lion yuan of two-year green bonds in the off­shore mar­ket in Oc­to­ber.

"This green bond ini­tia­tive comes from China's ef­fort to trans­form its eco­nomic growth model," said Ji Wei­jie, credit an­a­lyst at China Se­cu­ri­ties Co. "The govern­ment seems to want to lower the bar for cor­po­rate is­suance of such notes by al­low­ing them to also sell in the ex­change mar­ket. But the mar­ket may not grow very fast be­cause en­vi­ron­men­tal projects are usu­ally not prof­itable enough for in­vestors to want to put money in."

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