China’s CGN Wind (link is external) has issued a one billion yuan (link is external), five year bond to finance wind energy developments in Inner Mongolia, Guangdong, Xinjiang and Gansu. Unusually, the interest rate uses a combination of “fixed rate + floating rate”, with the floating rate tied to China Certified Emission Reduction (CCER). They called it a “carbon bond”.

Despite the unusual nature of the coupon, the interest rate is 5.65 percent, 46 basis points lower than the similar AAA bonds. The issuer says this is an “indication of the confidence of investors in additional carbon yields”.

Main underwriters were SPD Bank (link is external) and China Development Bank (link is external).