Hong Kong railway operator and property developer MTR Corporation continues to diversify its funding sources and investor base, pricing on June 3 its inaugural euro bond offering amounting to €3 billion ( US$3.45 billion ). The issuance also demonstrates MTR’s low-carbon financing agenda, adopting once again the green label in its latest fundraising.

The Reg S transaction consisted of three tranches, equally split at €1 billion each. The eight-year tranche has a coupon of 3.25% or a spread of 33 basis points over mid-swap, which was 32bp tighter than the initial price guidance of 65bp area. The second tranche was for 12 years with a coupon of 3.625%, equivalent to a spread of 60bp over mid-swap, which was 30bp inside the initial price range of 90bp area. And the final tranche was for 20 years with a coupon of 4.125%, representing a spread of 95bp over mid-swap, or 30bp back of the initial price guidance of 125bp area.

The transaction marked the largest bond deal for MTR and it was the largest Asia ex-Japan, non-sovereign euro green bond offering. Driven by strong demand, the tranches achieved the lowest credit spreads for their respective tenors among all Asia non-sovereign public euro bonds. The deal generated a total order book of €9 billion, or 3x the total issue size.

The offering further broadened MTR’s international investor base, with nearly 70% of the notes allocated to non-Asia investors. The 20-year tranche – the first-ever Asia ex-Japan, non-sovereign 20-year euro bond offering – was particularly well received by long-term institutional investors, including fund managers, insurance companies, official institutions, and pension funds.

The euro bond issuance represented yet another funding diversification by MTR and an illustration of its sustainable agenda following the company’s maiden foray in the Australian dollar bond market in January this year in green format. That transaction amounted to A$2 billion ( US$1.4 billion ) in dual tranches – equally split at A$1 billion each – for five years and 12 years. It was oversubscribed by 6.25x with a combined final order book of A$12.5 billion, the largest-ever Australian dollar corporate order book achieved in history.

MTR has entered a new phase of growth of its low-carbon railway infrastructure in Hong Kong and as part of its financing programme, the proceeds from the euro bond issuance will be used to invest in eligible green projects as defined in the company’s sustainable finance framework.

Société Générale was the sole ESG structuring adviser for the issuance as well as a joint global coordinator, bookrunner and lead manager along with BNP Paribas, Crédit Agricole CIB, Deutsche Bank, HSBC, and J.P. Morgan. Bank of China ( Hong Kong ), Barclays, Citi, ICBC ( Asia ), BofA Securities, Morgan Stanley, Standard Chartered, and UBS acted as the joint lead managers. Sustainable Fitch provided the second-party opinion on the green notes.