Case Study On The Financing Of Green Bonds Issued By Three Gorges Group

China’s power industry is accelerating the pace of transition to green and low-carbon industry.Among the many factors restricting its green transition,capital constraints are particularly prominent.On the one hand,the financing channels of the power industry are too single,for the reason that the power industry is a capital-intensive industry and the construction of power projects relied too much on the government’s financial funds and bank loans.On the other hand,the term of power investment projects is too long and the term of borrowing is short,which leads to term mismatch.Green bonds have the advantages of long maturity,low cost,and fast review,which can alleviate the difficulties in financing the power industry.As an innovative environmental financial product,green bonds have developed rapidly in recent years.Green bonds not only raise a large amount of low-cost funds for green projects,alleviating the problems of financing pressure and mismatch of capital maturity of green enterprises,they have promoted the green transformation of the industry.Therefore,it is a good choice for power companies to use green bonds as an innovative financing tool to alleviate funding pressure.This paper selects the case of China Three Gorges Group’s green bond financing for research.As one of the largest clean energy companies in China,China’s Three Gorges Group is at the forefront of domestic power companies in terms of the size of green bonds,the categories of green bonds,and the innovative nature of green bond terms.The Three Gorges Group has now issued multiple green bonds in both domestic and international markets.It has rich bond issuance experience,and issued a large number of green bonds with many kinds of categories,huge financing scale.It is representative and has made great contributions to China’s green development.This article first introduces the financing dilemma of the power industry where the Three Gorges Group is located,and points out that the transformation of the power industry requires green bonds.From the perspective of the Three Gorges Group’s own financing needs,the case of Three Gorges Group’s green bond issuance was introduced,and also introduced the general covenants,investment projects,and green covenants of green bonds.Then,it analyzes the causes of the debt issuance,innovations,issuance effects and existing problems.Finally,the advantages and disadvantages of the Three Gorges Green’s green bonds are summarized,and corresponding suggestions are given from the perspective of investors,enterprises and governments to promote the healthy development of green bonds.The paper draws the following conclusions from the case study:(1)It is a wise move for the Three Gorges Group to issue green bond financing.It makes full use of the policy advantages of the green bonds as well as its own advantage in the bond market financing.(2)Three Gorges Group’s product design innovations on green bonds have made bonds more attractive,involving a two-term variety call-back mechanism in green corporate bonds;developing green financing tools combining stock and debt in product innovation which is the green exchangeable bond with one-way callback mechanism on the issue method;In terms of design,through the design of interest rate compensation,resale clauses,redemption clauses and repair clauses to balance the interests of all parties.(3)Compared with ordinary bonds,green bonds have obvious financing cost advantages,reputation advantages and environmental benefits.(4)However,the Three Gorges Group still needs to work harder on green certification and information disclosure.In the future,investors need to be cautious when investing in green bonds,because green bonds also have credit risks;and enterprises need to strengthen the management of raised funds,more detailed information disclosure and the courage to innovate green bonds,in order to protect the green attributes of green bonds,Increase the attractiveness and credibility of bonds;and the government needs to improve the information disclosure system and cultivate a sense of green investment and financing in society.