HSBC Holdings Plc issued its first green bond, raising 500 million euros ($531 million).
The senior unsecured debt will pay an annual coupon of 0.625 percent, maturing in five years. HSBC France was the issuer.
“This is HSBC’s debut green bond,” Group Treasurer Bryan Pascoe said Wednesday. “The success of this trade shows the appeal of green bonds beyond the traditional investor base and shows how the private sector can play an important role in sustainable finance."
HSBC joins a handful of commercial banks such as Credit Agricole Corporate & Investment Bank SA, DNB ASA and National Australia Bank Ltd. that have issued climate debt. The market is largely dominated by development banks such as the European Investment Bank and the World Bank. Total sales over the past five years rose above $84 billion, according to data compiled by Bloomberg.
HSBC will be using the funds for projects in renewables, energy efficiency, sustainable waste and water management, sustainable land use, clean buildings and transportation and climate change adaptation. It has its own internal guidelines for defining a green bond.
“Raising capital in this way makes real business sense for issuers, investors and the projects it will ultimately fund,” said Spencer Lake, global head of capital financing. “The capital markets will play a pivotal role in financing the transition to a low carbon economy."
The issue will prioritize activities in the Middle East and Africa, and Europe particularly France, the bank said last week.