China Merchants Bank Lists $300m Carbon Neutral Bond on Luxembourg Green Exchange

In the presence of Luxembourg's Minister of Finance, Pierre Gramegna, and China’s Ambassador to Luxembourg, Yang Xiaorong, the Luxembourg Stock Exchange (LuxSE) and China Merchants Bank (CMB) today celebrated the listing of the bank’s landmark carbon neutral bond on the Luxembourg Green Exchange (LGX).

This pioneering dual-tranche bond issuance is comprised of a sustainability bond and a carbon neutrality-themed green bond.

“Today’s listing on LGX of the first carbon neutral bond by a Chinese bank in Europe once again underlines Luxembourg’s position as a leading international hub for sustainable finance. It also highlights the crucial role that international capital markets play in financing the transition towards a greener, more sustainable global economy”, commented Pierre Gramegna, Luxembourg's Minister of Finance.

The issuance, worth a total amount of $600 million, marks the first explicitly defined carbon neutral bond to be issued by a Chinese bank on international capital markets in Europe, as well as the first sustainability bond using a secured overnight financial rate (SOFR) linked floating rate by a Chinese bank in Europe.

The $300 million carbon neutral bond, which makes up one half of this two-tranche issuance, is the first carbon neutrality-themed bond from a Chinese issuer and is linked to China’s stated goal of achieving carbon neutrality by 2060. 

"It is our pleasure to welcome CMB back to LGX with this landmark bond issuance, just twelve months after we celebrated the listing of its first sustainability bond at our exchange. By bringing this issuance to the market, CMB has put itself at the forefront of Chinese green finance and shows its commitment to achieving China’s goal of net zero carbon emissions by 2060”, noted Julie Becker, CEO of LuxSE.  

After issuing its first sustainability bond in 2020, CMB has now brought its second sustainability bond to the international investor community. Tian Huiyu, CEO of CMB, added: “Today’s successful listing marks another milestone in CMB’s continuous dedication in ESG. It’s also another significant outcome of the cooperation between CMB and Luxembourg”.

The proceeds of the $300 million sustainability bond will be used to finance projects linked to sustainable city development throughout China, such as the provision of loans to micro and small enterprises to boost employment and support a new metro project in the Shanxi Province of Eastern China.