Fangda advises Hungary on the first green sovereign panda bond issue in China

Fangda represented Hungary on its RMB1 billion 3-year green panda bond offering, which was closed on December 16, 2021. This is another milestone in the development of China’s green bond market, unfolding a new era for panda bonds.

This transaction is

  • the first green sovereign panda bond offering in the market;
  • the first green bond offering on China’s debt market under the issuer’s Green Bond Framework established on the basis of the Green Bond Principles published by the International Capital Markets Association (ICMA), with use of proceeds meeting China’s Green Bond Endorsed Projects Catalogue (2021 Edition); and
  • the first green sovereign bond offering under the pilot program for social bonds and sustainability bonds launched by the National Association of Financial Market Institutional Investors of China in November 2021.

Hungary’s green sovereign bonds were offered to institutional investors in and outside China (including through the Bond Connect regime) on China’s interbank bond market. The bonds were priced at an annual coupon rate of 3.28%. The offering was 1.78 times over-subscribed with approximately 40% of the orders from overseas investors. The proceeds from the offering will be consolidated into Hungary’s green funding and will be used for eligible green expenditures under Hungary’s Green Bond Framework, intended to finance or refinance expenditures within Hungary’s central government budget contributing the transition to a low carbon, climate-resilient and environmentally sustainable economy.

Fangda, as the issuer’s counsel, drafted all the transaction documents in English and Chinese and advised Hungary on all aspects of the transaction, including but not limited to the registration of the green sovereign panda bond issuance programme, the certification requirements for green bonds in China, and the pre-issuance and ongoing disclosure requirements for green bonds. The Fangda team was led by the partner Christine Chen with key members including Helen Zhao and Sophie Li.