Commercial Bank Green Bond Issuance Falls 63.2% to RMB 111 Billion; ABC Sets Record Low Rate
Commercial banks issued 14 green financial bonds totaling RMB 111 billion in 2026 as of August 5, down 63.2% from RMB 302 billion across 30 bonds in the same period of 2025. Agricultural Bank of China sold RMB 20 billion of three-year green bonds at 1.51% on August 3, a record low for the bank. The contraction reflects base effects, banks' shift toward capital supplement bonds to address capital adequacy pressure, and slower growth in eligible green project reserves. Issuance concentrated in July and August, with the decline seen as rhythmic rather than structural.
As of August 5, commercial banks had issued 14 green financial bonds totaling RMB 111 billion in 2026, down from the same period of 2025. Issuers this year span large state-owned commercial banks, national joint-stock banks, city commercial banks and rural commercial banks. On August 3, Agricultural Bank of China successfully issued RMB 20 billion of green financial bonds in the interbank market with a three-year tenor and a coupon of 1.51%, a record low for the bank's green bond issuance. The bond carried an additional issuance mechanism: on top of the RMB 10 billion base quota, the full RMB 10 billion additional quota was exercised, bringing the final issue size to RMB 20 billion.
In the same period of 2025, commercial banks issued 30 green financial bonds with a total volume of RMB 302 billion. By comparison, commercial banks' green bond issuance in 2026 fell 63.2% year on year. The marked contraction in the first half of 2026 reflects not only the base effect but also a shift in banks' liability management priorities. Many banks have directed more quota and attention toward capital supplement bonds to address capital adequacy pressure, pushing green financial bonds lower in the pecking order of overall issuance plans. Slower growth in banks' reserves of eligible green projects has also constrained supply.
In terms of issuance pace, commercial banks' green financial bonds in 2026 were concentrated in July and August. Banks typically slow bond issuance in the second quarter due to performance assessments and half-year report disclosures; once liquidity conditions ease in the third quarter, the issuance window reopens, making July and August a traditional peak season for bank financial bond issuance. In the first half, banks coordinate their full-year liability plans, and with market rates at low levels during the mid-year window, issuance cost advantages are clear. Recent bond market liquidity has been stable and institutional demand for allocation is strong, so concentrated issuance lowers fundraising difficulty and matches the pace of green project deployment in the second half.
Green financial bond issuance in 2026 shows a rhythmic slowdown rather than a structural contraction. The funding cost advantage of green financial bonds over ordinary financial bonds remains one of the practical drivers for banks to issue.