A Case Study On Corporate Green Bonds’ Risks In China

With the increasing growth of economy in China,environmental problems become more and more serious.As an useful debt financing tool,green bonds are becoming an outstanding form of green finance which combines environmental protection with finance.The Chinese bond market has become the main force of green bonds issuance in the world now.China has issued 204.5 billion yuan green bonds in 2017,which is about four times the size of the issuance in 2015.Among all kinds of issuers of green bonds,green bonds issued by corporations has the advantages of high financing efficiency,encouraging issuers to make information disclosure actively and raising funds to invest environmental protection industry directly.But green bonds also have some risks such as high issuance rates,non-standard certification,and lack of liquidity in trading market.The article uses case study method to analyze the main risks of the first renewable corporate green bond in China,choosing Externality Theory,Coase Theorem and Theories of Bond’s Risks as the theoretical basis of the case.The article analyzes the bond’s interest rate risk,credit risk and liquidity risk.A good financing environment,the reasonable issuing interest rate,the advantages of issuer and water industry,the guarantee of the bond and the higher liquidity and industry status of issuer reduce the risk of the bond.But the non-standard third party institutions and low liquidity of trading market increase the risk of the bond.The possible innovations in this article are mainly case selection and researching perspective.The article selects the first renewable corporate green bond in China and studies the bond from the perspective of risks,which can make a significant reference in both theories and practices for corporations when issuing green bonds and managing risks in the future.