ICBC Singapore's first green bond is a mega US$2.2b issue

Singapore

INDUSTRIAL and Commercial Bank of China (ICBC) Singapore Branch has issued its first green bond, a mega US$2.2 billion deal in three currencies.

ICBC is China's largest bank and also the world's biggest bank by assets.

The issuance has USD dual tranches amounting to US$1.5 billion, a CNH 1 billion and 500 million euro tranches.

The state-owned lender sold US$900 million 3-year floating rate notes (FRN) priced at 3-month Libor plus 72 basis points and US$600 million 5-year FRN at 3-month Libor plus 83 basis points. An "FRN note" means the coupon for the bonds will be reset every three months and the current 3-month Libor or London interbank offered rate is 2.588 per cent.

The 3-year and 5-year tranches took in orders in excess of US$2.4 and US$1.5 billion respectively, including those from joint lead managers.

There was a good spread of investor interest from banks, public sector agencies and fund managers, said Clifford Lee, DBS Bank head of fixed income.

"The market is generally bullish on investment grade papers," said Mr Lee.

The bonds are expected to be rated A1 by Moody's and A by S&P.

DBS is a joint global coordinator, joint book runner and joint lead manager of the issue. It is the only Singapore bank that is a joint global coordinator for the deal. ICBC, Credit Agricole, HSBC and Standard Chartered Bank were the other joint global coordinators.

The CNH 1 billion 3-year tranche was priced at 3.3 per cent.

The 500 million euro tranche drew orders over 1.8 billion euros.

The issuance which had 22 underwriters aims to support the development of green projects under the Belt and Road Initiative and encourage investors to consider sustainability and climate change benefits of their investment.

The proceeds will be used to finance or refinance eligible green projects under the Belt and Road Inter-bank Regular Cooperation Mechanism established in May 2017.

Eligible green projects include those in renewable energy, low carbon and low emission transportation, energy efficiency, and sustainable water and wastewater management.

Mr Lee said the successful issuance of ICBC Singapore Branch's first green bond is underpinned by their commitment to financing sustainable development along the Belt and Road.

"With improving liquidity and diversification of bond issuers, we can expect more green bonds to come to market. Green financing is becoming increasingly popular with a range of investors seeking to make a positive impact with their investments," said Mr Lee.

The green bond market is still at a nascent stage though growing quite fast, especially China which is a leading green bond issuer as it helps pay for the cleaning up of the country's heavily polluted water, air and land.

China's green bond market is not without critics.

A Reuters report last month said that of the US$42.8 billion worth of green bonds issued in China last year, only US$31.2 billion would have met global criteria according to a paper published at the end of February by the Climate Bonds Initiative (CBI), a non-profit group backing green bond standards.