Bank of China issues the world's first sustainability re-linked bond

This landmark transaction comprises USD300 million 1% notes due 2024 under Bank of China Limited’s USD40 billion MTN programme, which are issued in alignment with the re-linking mechanism as described in the Bank of China Limited Sustainability Re-Linked Bond Management Statement (the “BOC SRLB Management Statement”). The bond references the four core components of relevant International Capital Market Association (“ICMA”) principles, and refers to the five core components of Sustainability Linked Loan Principles 2021.

The bond coupon comprises two parts – a base rate of 1% and (where relevant) a coupon adjustment rate, which is determined by reference to the performance of the relevant sustainability performance target(s) of the underlying Sustainability Linked Loans (“SLLs”), as designated by Bank of China with reference to the criteria and standards described in the BOC SRLB Management Statement. Each coupon adjustment is subject to a cap and a floor, which will not be cumulative.

The net proceeds of the bonds will be used to finance and/or refinance the eligible SLL portfolio as described in the BOC SRLB Management Statement.

Partner Jaclyn Yeap who led the transaction commented: “This novel structure features bonds that are “re-linked” to the ESG-related performance of an underlying portfolio of loans, which pushes the boundaries of integration of the bond and loan sustainable finance markets. We are very proud to have supported Bank of China on its leadership in shaping the sustainable finance landscape across Asia Pacific and globally.”

The A&O team comprised partners Jaclyn Yeap, Agnes Tsang and Yvonne Siew with support from Alan Zhang, Evelyn Zhu and Rey Zhu.

Our involvement in this transaction follows our advice on Bank of China Limited, Macau Branch’s issuance of the first ever biodiversity-themed green bonds out of Asia in September 2021, Bank of China Limited, Hong Kong Branch’s first climate transition bond issuance in January 2021, Bank of China’s first blue bond issuance in September 2020, Bank of China Limited, Macau Branch’s small and medium enterprises themed (Covid-19 Impact Alleviation) social bonds issuance in March 2020, and Bank of China Limited, Macau Branch’s issuance of the first SOFR-based bonds in Asia and first green bonds in Macau in October 2019.

Disclaimer:

The information contained herein is restricted and is not for publication, distribution or release in or into the United States of America, Australia, Canada, Japan or South Africa. This announcement is not an offer of securities for sale or a solicitation of an offer to purchase securities in the United States or any other jurisdiction. The securities referred to herein (the "Securities") have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act).