The Bank of China issued three “green bonds” recently in overseas markets, which are welcomed by investors, the Xinhua News Agency reported, another indication of global investors’ confidence in China’s carbon reduction initiative as well as the country’s economic fundamentals, experts said. 

The Bank of China issued three green bonds via its three overseas branches in Macao, Singapore and Luxembourg, raising $2.05 billion in total, the report noted. 

In particular, the bank’s branch in Macao issued Secured Overnight Financing Rate (SOFR) floating rate bond amounting to $1 billion, setting a record for Asian SOFR bond issuance scale. 

Despite rising market volatility, the green bonds are welcomed by domestic and overseas investors. The funds raised will be used to support green projects such as clean transportation, green architecture, sustainable water resources and sewage treatment. 

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times that the green bonds’ strong sales also showed overseas investors’ acknowledgement of China’s macro economy, as well as the country’s persistent focus on environmental protection.

“Investors usually think of two things in judging the possibility of bond default: the bond issuer’s credit and the general economic environment. China’s economic development still shows rather powerful momentum and positive investment environment, both of which are attractive to overseas investors,” Dong said.

He also noted that the recent US Federal Reserve’s interest rate hike might produce a negative impact on bond issuance by increasing fundraising costs, but the impact will be very limited.

Global Times