pennbattle38000hs| Four public offerings took the lead in launching new green debt-based "shelves"

Yu Shipeng, a reporter from the Securities Times

At the beginning of MayPennbattle38000hsThe debt market ushered in innovative products. Starting from May 9, Manulife Fund, Oriental Fund and China Sea Franklin Fund's China Bond Green inclusive Financial Bond Index Fund began to issue, together with the Castrol China Bond Green inclusive Financial Bond Index Fund, which was issued on May 6. The first batch of four green inclusive financial index bonds were officially launched to the market.

A reporter from the Securities Times found that in addition to the four products issued this time, Morgan Fund, Bao Ying Fund and Penghua Fund have also been reported so far this year.Pennbattle38000hsGreen related theme bond fund. From a larger scope and longer dimension, this means that the green investment related to public offering ESG (environment, society and corporate governance) has continued to carry out more subdivided product innovation since it expanded from equity to fixed income in 2022.

Green debt base continues to be new.

According to public information, the first four green inclusive financial bond index funds track the preferred index of green inclusive financial bonds of China Bond, and such funds invest no less than 80% of the fund's assets.

The preferred index of green inclusive theme financial bonds of China Bond was jointly launched by Pudong Development Bank and China Bond valuation Center on January 9, 2023. According to the analysis of Castrol Fund, the index component bonds are composed of bonds publicly issued in China and listed in circulation, with an issuance period of 5 years or less, which support the landing of the national strategy of green finance and inclusive finance. Credit bond rating requires that the main rating is AAA, and the implied rating of China bond market is not lower than AAA.

"the indices tracked by the relevant funds have distinct themes and good quality, and they are clearly invested in commercial bank bonds and green policy financial bonds in the areas of green, small and micro enterprises, agriculture, rural areas and farmers, poverty alleviation, and so on, reflecting green, inclusive and preferential treatment. lead investors to understand the profound connotation of green finance and inclusive finance." The Castrol Foundation said.

It is worth mentioning that the four funds are not sold to individual investors for the time being. Manulife China Bond Green inclusive Financial Bond Index Fund is proposed to be managed by Shen Qiaoxi, Castrol Fund, Oriental Fund and Guohai Franklin's related funds, and the proposed fund managers are Zhu Yang, che Rinan and Shen Zhuxi. Among them, che Rinan is the general manager of the fixed income Research Department of Oriental Fund and a member of the Public Investment decision Committee.

According to the official website of the Securities Regulatory Commission, in addition to the first four green inclusive financial bond index funds officially introduced to the market, the Bosch Fund also reported a green inclusive financial bond index fund in July last year, which is currently waiting for approval. From the end of 2023 to April this year, Huarun Yuan Fund, Morgan Fund, Baoying Fund and Penghua Fund reported green-related bond funds. Among them, the Morgan Fund reported is the Morgan common catalogue green bond fund, the Baoying fund reported is the Baoying green inclusive financial debt base, and the Penghua fund reported is the Penghua green bond fund.

Have a certain degree of scarcity

In the category of bonds, green bonds generally refer to the investment varieties related to the green industry, especially the securities raised to support green industries, green projects or green economy activities that meet the prescribed conditions, issued in accordance with legal procedures and repaid principal and interest in accordance with the agreement.

According to the analysis of market participants, up to now, the issuers of the green bond market are mainly high-quality state-owned enterprises and central enterprises, with high overall credit qualification, low credit risk and high market recognition. Among them, some subjects with medium and high ratings and strong qualifications, thanks to the strong support of the policy side and the advantages of green projects, green bonds have a certain interest rate advantage compared with ordinary bonds with the same rating and maturity.

Manulife Fund said that in recent years, green investment, which advocates the concept of sustainable development, has gradually become an international consensus and an important direction for the layout of asset management agencies.

Zhu Yang, fund manager of Castrol Fund, said that although green, small and micro, agriculture, rural areas and farmers and other theme financial bonds have been issued in recent years, ordinary debt of non-theme commercial banks is still the main category, so at present, green inclusive financial bonds still have a certain degree of asset scarcity. Compared with bank secondary capital bonds and perpetual bonds, green inclusive financial bonds have the characteristics of relatively higher liquidity and lower volatility, and have a wider range of duration than bank certificates of deposit concentrated in one year or less. In addition, at present, most of the issuers in China's green bond market are state-owned enterprises, central enterprises and financial institutions, with a high degree of market recognition and relatively controllable credit risk; along with the follow-up green bond market supporting supervision, letter and other related systems are more perfect, the credit qualification advantages of the relevant subjects may be further highlighted. " Zhu Yang said.

Continuous innovation of investment products

In terms of investment strategy, the launch of the first batch of four green inclusive financial bond funds also means that the public offering has taken a new step in green investment related to ESG.

A public market person told the Securities Times that to some extent, the green debt base can be divided into the category of ESG investment. In recent years, a major development trend of public ESG investment is to expand from equity investment to the field of fixed income. As the underlying assets of fixed income continue to be rich, there are more and more subdivided products of ESG fixed income funds.

According to flush iFinD statistics, so far, there are seven green-related bond funds on the market, of which five are secondary new funds issued after 2021. For example, the China Merchants Fund CFETS Inter-Bank Green Bond Fund was established in October 2023 with a scale of 8 billion yuan. Lubermai China Green Bond Fund, Yinhua Green low carbon Bond Fund and other products have all exceeded 2 billion yuan.

Earlier, when public ESG investment expanded from equity investment to fixed income, bond funds also assumed the role of "pioneer". For example, AVIC Ruihua ESG, founded in March 2022, is the first ESG-themed bond fund on the market. Then, at the end of 2022, Castrol issued the first open-end ESG bond fund in the market-Castrol Yangtze River Delta ESG pure bonds, which further increased the ESG bond funds. At that time, Han Xiaoyan, deputy director of ESG Research Department of Castrol Fund, said that there are many positive development trends in the process of accelerating the expansion of ESG theme funds in China, such as more diversified strategies. From the perspective of asset classes, although ESG equity funds still account for the vast majority, there are also ESG bonds, green bond public funds to break the ice.

Manulife Fund stated that based on China's "double carbon" goals and green transformation needs, green-themed investment is in line with the basic consensus of green and sustainable development. In addition, policies have also continued to support, encouraging financial institutions and non-financial companies to issue green bonds to improve the environmental performance of investment activities and serve the development of green economy. From the perspective of asset supply, China's green bond market is still in a stage of rapid development. Compared with overseas, there is greater room for improvement in the issuance scale and proportion in the bond market. The potential of the green bond market in private enterprises, manufacturing, and construction industries has yet to be released, and there will be a larger and more diversified supply of green assets in the future. From a demand side, regulators continue to guide domestic financial institutions to increase investment in green bonds, which will help promote the further expansion of green bonds. As the rating method is gradually aligned with international standards, the appeal of China's green bonds to international institutional investors is expected to be further strengthened, and the convenience of investment by foreign institutional investors will continue to improve. It is expected that related products will have broad market prospects in the future.