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China to sell its first green sovereign bond Wednesday

China to sell its first green sovereign bond Wednesday

China will finalise the long-awaited global green sovereign bonds on Wednesday. This is expected to mark the beginning of a series that will increase its market share at a crucial time.

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Top Chinese Finance Ministry officials laid out the detail at a meeting in London with investors on Tuesday. The 6 billion yuan bond ($825 millions) is scheduled to be listed on the London Stock Exchange.

Green bonds have grown to a market value of $3 trillion over the past few years. China's state-run firms have made a significant contribution to this growth. However, international investors have been waiting years for the government to act.

Director General Yu Hong of the Chinese Finance Ministry and his Deputy, Xing Chaohong, explained that it will be in two parts – one with a maturity of 3 years and another with a maturity date or deadline of 5 years.

Both will have fixed rates. The interest rates are expected to be below 2%, but it depends on the demand during formal sales which will be overseen by eight banks in both China and Europe.

The size of China has made it a long-anticipated country to issue a global bond.

China's plan was finally revealed earlier this year, after British Finance minister Rachel Reeves and Vice Premier He Lifeng met in Beijing to discuss pragmatic co-operation on financial services.

China, the largest emitter of climate-warming gases, has stated that it will peak its carbon dioxide emission before 2030 and be carbon neutral by 2060.

The Finance Ministry published its framework for green bonds in February. It was described as an attempt to "attract foreign funds to support low-carbon and green domestic development".

Climate Change Mitigation and Climate Change Adaptation were listed as the five main priorities.

An investor who attended the meeting on Tuesday said that the money raised will be used to fund the electric vehicle charging networks and national parks of the country.

(source: Reuters)