Mortgage-backed green securities are picking up in China as Beijing favours environmentally friendly buildings, Fitch says
- Asset securitisation deals backed by green buildings surged to 110 billion yuan (US$15.8 billion) in the first half, compared with 123.3 billion yuan for the whole of 2021
- The building sector currently accounts for half of China’s carbon emissions and will need to contribute to a 13.5 per cent reduction in its energy consumption over the 2021 to 2025 period
Mortgage-backed green securities have gained momentum in China, as Beijing prioritises environmentally friendly buildings to meet its climate targets, Fitch Ratings said.
The recent deals have been led by commercial developers seeking access to cheaper funding, increased liquidity, green branding and a broadened investor base, according to the report.
“Mortgage-backed securities in China are increasingly embedding energy-efficient residential or commercial buildings into their asset pools, encouraged by recent policies of Chinese authorities,” Jia Jingwei, an analyst at Sustainable Fitch, the sustainable finance research unit of the credit rating agency, said in the report.
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Decarbonising the building sector is crucial for China to achieve its target of reaching peak carbon emissions by 2030 and becoming carbon neutral by 2060. Enhancing green building construction standards and improving building energy efficiency are also among the top policy priorities under Beijing’s 14th five-year plan, which runs from 2021 to 2025.