China’s Ministry of Finance ( MoF ) issued on April 2 on the London Stock Exchange’s Sustainable Bond Market, the country’s first offshore yuan-denominated sovereign green bond, raising 6 billion yuan ( US$0.82 billion ), in what is seen as a critical move by the country to realize its green development ambitions through participation in the international bond market.

The offering was arranged into two equal-sized tranches with tenors of three and five years maturing in 2028 and 2030, respectively. The final coupon rate for the three- and five-year tenors settled at 1.88% and 1.93%, narrowing by 42 basis points ( bp ) from their initial pricing guidance of 2.30% and 2.35%, reflecting the strong investor demand.

Total subscription amounted to 41.58 billion yuan, 6.9 times the issue amount. By region, Asia-Pacific and non-Asia-Pacific investors accounted for 83.5% and 16.5% respectively; and by type, sovereign and super-sovereigns accounted for 30%. banks for 48%, and insurance and asset management investors for 20%.

Bank of China, Bank of Communications, Barclays, China International Capital Corporation, Crédit Agricole CIB, HSBC, ICBC and Standard Chartered were the joint lead managers. Crédit Agricole and Bank of China acted as green structuring advisers, while Lianhe Green Development and DNV Business Assurance provided second-party opinions.

The selection of London as the location for China’s inaugural sovereign green bond issuance highlights the deepened bilateral relationship between China and the UK on finance and climate matters, and it comes after top officials from both countries met in January and reached a consensus on a series of initiatives on economic and climate cooperation.

An earlier signal that the bond debut was in the works was the MoF’s publication of China’s sovereign green bond framework in February 2025. The framework, which aligns with international green bond standards, specified the use-of-proceeds for projects under the forthcoming sovereign green bond, flagging five key areas – climate mitigation, adaptation, natural resource conservation, pollution prevention and control, and biodiversity conservation.

Chinese companies have been an active player in global green bond market since the initial tap by the corporate sector in 2015. Chinese corporates and financial institutions issued US$49.5 billion of green bonds in 2024, according to data from Environmental Finance, contributing to an 8% share of the global green bond market.

China, with over 10 years of green bond issuing experience, has finally stepped on stage on as a sovereign issuer; and, by expanding the supply of yuan-denominated assets in the green finance product space and offering international responsible investors opportunities for diversified green asset allocations, the country is set to further boost its share of the global green bond market.

“China’s maiden sovereign green bond issuance underscores the government’s continued focus on decarbonization and green investment,” says John Wang, vice-president and senior analyst at Moody’s Ratings. “The move will encourage more Chinese entities to seek funding in the international sustainable finance market, which will diversify their funding sources as they transition to low-carbon practices.

“In addition, the issuance will reinforce China’s leadership in green finance and complement its other sustainable finance initiatives, such as the recent expansion of the national emissions trading scheme.”