Postal Savings Bank of China has priced CNY 5 billion, roughly USD 740 million, of three-year carbon-neutral green financial bonds, attracting subscription of 3.99 times the offer size. The transaction was split into two tranches, a fixed-rate portion at 1.46% and a floating-rate portion at 1.48%, according to the lender.
The bank, one of China's largest state-owned commercial lenders, said proceeds would be directed to projects that generate clear carbon-reduction benefits and qualify under China's Green Bond Endorsed Projects Catalogue. Both tranches carry a three-year tenor, keeping the maturity profile aligned with the medium-term horizon typical of onshore green financial bond issuance from the major Chinese banks.
STRONG DEMAND ACROSS TWO TRANCHES
The 3.99-times subscription level points to firm appetite from domestic institutional investors for high-grade green paper from a state-owned lender. The near-parity between the fixed and floating coupons, at 1.46% and 1.48% respectively, reflects the benign onshore funding environment in which large Chinese banks are currently issuing debt, with base rates and credit spreads both compressed by comparison with earlier years.
Splitting the deal into fixed and floating legs broadens the potential investor base by catering both to accounts seeking predictable cash flows over the three-year horizon and to those preferring rate-linked returns. The structure has become a familiar feature of large green bond programmes from major Chinese banks, allowing issuers to tap different pockets of demand within a single transaction and to secure a deeper order book.
For Postal Savings Bank of China, the size and cover of the deal reinforce the lender's positioning as a regular issuer of labelled sustainable debt in the onshore market. The oversubscription provides scope for tight pricing on both tranches and validates the bank's approach of combining green use-of-proceeds commitments with straightforward fixed-income structures.
PROCEEDS TIED TO CARBON REDUCTION
Postal Savings Bank of China said the funds raised would finance projects with clearly identified carbon-reduction benefits, in line with the criteria set out in the Green Bond Endorsed Projects Catalogue. That framework, jointly published by Chinese regulators, defines the categories of green activities eligible for the labelling of use-of-proceeds bonds in the onshore market.
By carrying the carbon-neutral designation, the notes commit the issuer to allocate proceeds towards initiatives whose greenhouse-gas benefits can be measured and reported. Such labelled instruments have become an important channel through which Chinese lenders support the national push towards lower-carbon growth, and the PSBC transaction adds further capacity to that pipeline.
The pricing outcome extends a growing track record of oversubscribed green issuance by mainland Chinese banks, with investors continuing to look for defensive, policy-aligned exposures at a time of subdued yields in the onshore bond market. Full details of the transaction have been published through Postal Savings Bank of China's official announcement channels.
Placing the new bonds alongside the bank's earlier onshore issuance provides another data point for market participants tracking the pricing of state-owned Chinese lenders' carbon-neutral instruments. The size of the order book relative to the CNY 5 billion offer suggests that further transactions of comparable structure and tenor would find receptive investor demand should the bank return to the market later this year.