Bank of China sells green covered bond

Bank of China, rated A1AA, raised $500 million from a three-year green covered bond issue on Thursday. The deal marked the first ever sale of covered bonds from a Chinese bank although covered bond experts might not recognise it as such.

Covered bonds are typically backed by a pool of retail mortgages. But in this case, the cover pool consists of renminbi-denominated green bonds, almost entirely sold by two issuers in China's onshore market. The bonds in the pool have a maturities ranging from 2 to 8 years, with a weighted average life of about 3 years.

Bonds of China Railway Corp and Shanghai...