CHINA’S first green bond has raised US$300 million after pricing last week, as the country seeks new funding sources to help raise about US$1.6 trillion over five years to help fix its environmental problems.

    China is scrambling to lift environmental standards in a country where only eight out of 74 cities met air quality minimum standards and only 25 percent of drinking water achieved national quality standards, according to latest government data.

    Green bonds are certified to show that funds raised will be used for environmental projects and are a popular tool for socially responsible investment. For issuers, they can offer a new investor base to raise funds.

    “We see activity around green bonds in a number of different places, but signals out of China are very strong,” said New York-based Manuel Lewin, head of Responsible Investment for Zurich Insurance Group.

    Wind energy firm Xinjiang Goldwind Science & Technology said it will use proceeds from the first green bond issue for general working capital and refinancing purposes for its group companies. The US$300 million deal received orders of US$1.4 billion.

    China’s debut green bond comes at a time when the country is opening up its debt markets to global investors. Earlier this month, China relaxed rules for some long-term foreign investors to participate in its interbank market.

    A task force under the leadership of the People’s Bank of China has recommended setting up a green financial system to help contain the cost of pollution.

    Currently about 70 percent of the US$200 billion China spends each year on environment-related projects come from loans made mainly by domestic banks, some with implicit government backing. Analysts say, private sector investment is needed to meet China’s new ambitious targets.

    The task force estimates that achieving environmental goals under the five-year plan over 2016-2020 would require an annual investment of at least US$320 billion. (SD-Agencies)