Chinese banks are using ethically labelled bonds to refinance existing loans, helping to propel the country to become the world’s biggest issuer of green paper.
Green bond issuance is at a record high and China became the largest source of new paper in the third quarter of this year, taking it to the joint-largest source of issuance in the year to date, along with France.
Financial institutions issued three-quarters of green bonds in China since the market first emerged in 2014, a Financial Times analysis of data from the credit rating agency Moody’s has found.
When raising the cash, banks are reserving the right to use it to refinance existing lending rather than using it to finance new projects, some of the bonds’ documentation suggests. Many of the refinanced loans are not labelled as green.