Yunnan Provincial Energy Investment Group is the first Asian issuer selling double ESG bonds. The double bond covers green international bonds and sustainability-linked status. It draws more demands amid the volatile market. Investors have warned of the challenging market. But despite taking it, the Chinese hydropower, thermal, and alternative energy company sold its $230m, or 5.3% three-year bond at 99.454. It is to yield 5.5% of 6% inside initial guidance.
A banker on the transaction said that the final price is quite fair. The order book gained just $410m. It included the $210m from the leads during the announcement of final guidance. IFR Asia reported that the range of the investor feedback was from low-5% to high-5% areas. Some investors adjusted their prices due to the market conditions.
The proceeds would refinance offshore debt related to green projects. On the other hand, the sustainability-linked aspect gives the notes a coupon step-up in case the issuer misses targets. The epitome of the target could be when it increases wind or solar power generation capability. If the company failed to improve the wind generation capacity by 173% by December 2023, the coupon would be by 15bp. It would be meeting comparison from the end of 2021. In addition, if they fail to meet the solar power target by 43% within the time allocation, it would become 10bp. The date of reporting is June 30, 2024. Then, the payment should be on October 22, 2024.
Globally, Yunnan Provincial Energy is not the first that have double ESG bonds. The first one worldwide is from Austrian electricity company Verbund in March 2021. It sold for $545m, a 20-year note. The note covers a green use of proceeds and a step-up pegged to its target of improving renewable energy.
