China ESG - Weekly News: Hungary prints first green sovereign Panda bond

Part two of EU climate plan to tackle buildings, methane and natural gas

The European Commission proposed a second, smaller set of regulations on Wednesday, which is focused on buildings, methane emissions and natural gas.

A third proposal aimed at buildings would require EU countries to renovate millions of properties this decade to save energy.

Roughly 85% of Europe's buildings are expected to be standing in 2050. Most are heated by fossil fuels and have a poor energy performance, meaning widespread renovations are needed to bring them into line with the EU's net zero goal.

Source: Reuters

Hungary prints first green sovereign Panda bond

Hungary on Tuesday issued the first green sovereign Panda bond in China's interbank bond market with a Rmb1bn (US$157m) deal via bookrunner and lead underwriter Bank of China.

The three-year bonds were priced at par to yield 3.28%, around the middle of an indicative range of 2.9%–3.5%. The transaction was 1.78 times covered.

The green angle contributed to lower the funding cost by around 30bp compared to Hungary's last Panda issue in 2018, according to a person familiar with the deal. The spread over China Development Bank's bonds – the accepted benchmark for the Panda market – was 59bp this time against around 90bp in 2018.

"The green format has helped to attract investors as we have seen with other green transactions in the onshore market," said the person. "Corporate issuers have been able to achieve a 5bp–10bp cost saving compared with their non-green issues in some recent deals. Financial institutions sometimes save even more than 10bp, depending on the issuer's credit quality and investor demand."

Source: International Financial Review

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