Allen & Overy has advised the joint lead managers in connection with China Construction Bank Corporation’s issuance of significant multi-tranche environmental, social and governance (ESG) themed bonds worth a combined total of USD2.4 billion approximately. The landmark issuance marks a number of market-firsts in ESG finance.
The issuance comprises USD600 million Senior Sustainability-Linked Bonds due 2024 and USD550 million Senior Sustainability-Linked Bonds due 2026 (both issued by China Construction Bank Corporation Hong Kong Branch) (the USD Tranches); EUR800 million zero coupon Senior Green Bonds due 2024 (issued by China Construction Bank Corporation, Luxembourg Branch) (the EUR Tranche); and CNH2 billion Senior Transition Bonds due 2023 (issued by China Construction Bank Corporation Singapore Branch) (the CNH Tranche).
This landmark issuance marks a number of market-firsts, including:
It is the world’s first simultaneous issuance of tri-product ESG bonds (ie green, transition and sustainability-linked bonds);
The USD Tranches constitute the world’s first USD-denominated sustainability-linked bonds issued by a financial institution;
The EUR Tranche constitutes the world’s first green bonds whose use of proceeds are specifically designated for, among others, river protection projects issued by a Chinese issuer;
The CNH Tranche is to facilitate China’s aim to hit peak emissions before 2030 and for carbon neutrality by 2060. It constitutes the first transition bonds issued by a Chinese bank in Singapore, and with the largest issue size denominated in offshore Renminbi for transition bonds thus far;
The USD Tranches and the CNH Tranche constitute the first sustainability-linked bonds and climate transition bonds reviewed and certified by Hong Kong Quality Assurance Agency (i.e. the HKQAA).
Moreover, the medium term note programme (the MTN programme) under which the bonds have been issued is the first MTN programme of a Chinese issuer which contains the comprehensive SOFR reference rate mechanism covering the full range of optionalities, to cater for future issuance of USD-denominated floating rate notes in light of the LIBOR discontinuation.
Hong Kong-based partner John Lee commented: “This issuance is impressive not only because of its size but also because it evidences the fast pace innovation and development of sustainable financing, particularly in the Asia-Pacific region. It is great to see a Chinese bank driving the market forward in this regard which means more and diverse ESG investments are available to investors.”
The Allen & Overy team was led by partner John Lee and of counsel Jessica Li, with support from senior associate Joel Lam, associates Claire Tang and Gordon Ng, trainees Hiu Wing Kwok and Eugean Lo, and paralegal Rachel Cheung.
