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Bonds

Hong Kong’s Swire Properties to raise US$500 million in maiden green bond issue

Priced at 3.5 per cent, the 10-year bond also obtained the first ‘green finance certification’ issued by the Hong Kong Quality Assurance Agency

PUBLISHED : Thursday, 04 January, 2018, 6:00pm
UPDATED : Thursday, 04 January, 2018, 10:06pm

Swire Properties has priced its first green bond, a 10-year US$500 million issue, at 3.5 per cent and said that it would use part of the proceeds to finance the One Taikoo Place office tower currently under construction.

The bond, due in 2028, will be issued under Swire’s US$4 billion medium term note programme, and is expected to be rated A2 by Moody’s, and A by Fitch. It has also obtained the first “green finance certification” issued by the Hong Kong Quality Assurance Agency (HKQAA).

One Taikoo Place is a core component of the group’s HK$15 billion (US$1.9 billion) redevelopment project of Taikoo Place, which is an office community on Hong Kong Island’s Eastern District comprising eight existing grade A office properties.

“The green bond will be listed on the Hong Kong stock exchange on January 11 after the bond settlement,” said a spokesman from Swire Properties.

Guy Bradley, Swire Properties’ chief executive, said in a statement that the HKQAA certification underlines the company’s support to the Hong Kong government’s effort to develop the city’s green capital market.

Apart from One Taikoo Place, Swire Properties said the proceeds from the bond were slated for funding or refinancing the company’s new or existing green projects. These include green building development, energy efficiency, renewable energy, sustainable water and wastewater management. Swire Properties also said it would disclose on its website how the net proceeds were allocated.

Bank of America Merrill Lynch and HSBC served as joint bookrunners and lead managers for the deal, in addition to their roles as green structuring advisers.

Swire Properties’ green bond framework was also reviewed by Sustainalytics, a global ESG (environmental, social and governance) research and analysis firm.

Green bonds are no different from regular bonds with one exception – that proceeds are earmarked for projects with environment benefits, primarily climate change mitigation.

Global green bond issuance is expected to reach US$130 billion this year, according to Climate Bonds Initiative.

As part of the Hong Kong government’s effort to keep pace with the development of green financing globally, the HKQAA, which is a certifications issuing organisation of the government, has taken the lead to provide third-party conformity assessments for green finance issuers through its certification programme.

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