The world’s leading market pulp producer, Suzano of Brazil, raised 1.2 billion yuan ( US$165 million ) in green Panda bond, representing the first company from the Americas outside of the financial services sector to issue this renminbi-denominated debt.

The bond, announced on November 15, has a tenor of three years and pays an annual coupon of 2.80%. The proceeds will be entirely allocated to financing certified eucalyptus plantations in Brazil. The planted trees produce renewable raw materials that can replace petroleum derivatives. This contributes to China’s goal of accelerating the decarbonization of its economy.

Suzano director of financial planning and M&A and CFO-elect Marcos Assumpção says the fund raising enables Suzano not only to diversify its funding sources but also to access a market with enormous potential under competitive conditions. “We are adapting to the dynamics of the Chinese market and, following this debut, we expect future issuances to feature even more attractive rates, terms, and volumes,” he adds.

Given the green qualification of the operation, Suzano structured the issuance with the support of Lianhe Equator, one of the third-party evaluation and certification organizations for sustainable finance in China, in the role of second-party opinion provider, to ensure that the use and management of the investments meet the local requirements of the instrument. Sustainalytics also issued an opinion confirming that the structuring of the operation meets the four components of the Green Bond Principles 2021 of the International Capital Market Association ( ICMA ), and that the company’s allocation and impact reports are aligned with market practices.

Pablo Machado, president of business management at Suzano Asia, says the Panda issuance demonstrates Suzano’s commitment in continuously investing in sustainable practices, and the company’s confidence in and dedication to continuous growth in China. “With the green Panda bonds, we expect to further strengthen our ties with the Chinese financial market, especially in the promotion of green finance, so as to accelerate China’s shift towards a low-carbon economy,” he points out.

“The successful issuance of Suzano’s Panda bond potentially opens up new financing avenues for corporates in Brazil and the Americas,” says Timothy Yip, head of debt capital markets at HSBC China, which acted as a joint lead underwriter and bookrunner for the transaction. “In recent years, China has been accelerating the opening-up of its onshore bond market, attracting more global issuers and investors to participate through Panda bonds. The sustained efforts towards building frameworks and policy support for Panda bonds has ensured deeper market access and more diversified financing options for global investors. It has also contributed to the growing acceptance of renminbi as a financing currency amongst global issuers.”

The launching of Suzano’s first Panda green bond comes after the National Association of Financial Market Institutional Investors ( NAFMII ) approved the company’s programme to issue up to 20 billion yuan over the next two years

Suzano maintains over 1.5 million hectares of land dedicated to production primarily consisting of eucalyptus plantations in regions previously degraded. The company also maintains 1.1 million hectares dedicated to conservation.