Modern Land becomes first mainland developer to issue green bond

The Beijing-based homebuilder will issue US$350 million of three-year notes to fund environmentally-friendly projects

PUBLISHED : Friday, 14 October, 2016, 3:21pm
UPDATED : Friday, 14 October, 2016, 3:21pm

Modern Land, a Beijing-based homebuilder, has become the first mainland Chinese real estate firm to issue a green bond.

The firm announced on Friday that it has entered into an agreement in connection with the issuance of US$350 million of senior notes due 2019, at an interest rate of 6.875 per cent.

“The notes are issued as green bonds to fund existing projects of the group and businesses with environmental benefits in alignment with the green bond principles,” Zhang Peng, Modern Land’s president and executive director said in a filing to the Hong Kong bourse.

A framework designed by Modern Land, and assessed by International Climate and Environmental Research–Oslo (CICERO), sets out the projects eligible to benefit from the funding, which need to support low-carbon, climate-friendly growth.

The projects must also have a high likelihood of obtaining green building certification, and achieve additional energy saving targets of 15 per cent for new construction and 30 per cent for renovations.

Guotai Junan, Morgan Stanley and HSBC have been appointed as the joint global coordinators. They will work with UBS, VTB Capital and Zhongtai International as joint bookrunners and joint lead managers.

VTB Capital, notably, is the first Russian bank to take a lead role in green bond issuance.

China has become the world’s largest green bond market, with issuance by mid-July reaching 75 billion yuan (US$11 billion), 33 per cent of the global total. Green bonds are designed to raise funds for new and existing projects that carry environmental benefits.

In a reflection of the importance Chinese policy makers now place on issues relating to environmental sustainability, green development was one of the five development concepts identified in the government’s 13th five-year plan earlier this year.

In Hong Kong, Link Real Estate Investment Trust issued its US$500 million green bond in July, the first to be issued by a Hong Kong business enterprise, and the first by a property company in Asia.