Bank of China initiative ensures international investors can support projects within China

International investors will find it easier to buy into China's environmentally friendly projects after Bank of China listed a "green bond" on the London Stock Exchange on Friday.

The three-year $500 million China Green Covered Bond, the first such bond to be issued by a Chinese entity and secured by onshore assets, offers investors a coupon rate of 1.875 percent. It is likely to be popular among European institutional investors, especially funds with mandates to invest in sustainable projects.

Bank of China Chairman Tian Guoli said: "Being rooted in London for 87 years, we regard it as our own mission to connect China's promising Green Bond market with London's vibrating capital market. This particular green covered bond connects China's onshore green bond market with international investors, via an asset backed structure."

China has led the world in the sale of green bonds so far this year. As of July, it had issued 9.02 billion pounds ($11.23 billion) of green bonds out of the 25.69 billion pounds ($33.83 billion) issued globally.

The numbers reflect robust growth from last year, when green bonds worth 27.46 billion pounds were issued globally and 0.99 billion pounds by Chinese organizations.

Green finance was on the agenda at the G20 Leaders Summit for the first time when China hosted the meeting in Hangzhou when Beijing and the UK's central bank jointly chaired the G20 Green Finance Study Group, which presented a report that was accepted and endorsed by G20 leaders.

The Bank of China's green bond is rated Aa3 by Moody's, which is the sovereign rating of China, signifying its strong credit quality.

It is structured as a covered bond, giving investors dual recourse structure; allowing claims over a dedicated "cover pool" of assets, and the usual claim against Bank of China.

Andrew Carmichael, capital markets partner at law firm Linklaters, said the new bond shows both China and the Bank of China's commitment to green finance and to enabling international investors to have exposure to Chinese domestic green financial assets.