Taiwan High Speed Rail Issues TWD1bn Sustainable Bond

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  • Taiwan High Speed Rail Issues TWD1bn Sustainable Bond

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    Taiwan High Speed Rail Corporation (THSRC) [2633:TT] raised TWD1bn (USD35.95m) by issuing a three-year unsecured sustainable bond at full price with a fixed annual rate of 0.3% on August 30, as reported by Commercial Times on the same day. THSRC aims to use the proceeds of this sustainable bond to support its green investment initiative and social benefit investment plan. This was the first time for THSRC to use sustainable financial instrument, which also made THSRC the first that issued sustainable bonds among public transportation service providers in Taiwan.

    THSRC was founded in 1998 with its corporate value to operate morally, enhance corporate governance, and commit to corporate social responsibilities. It is also an active ESG performer, obtaining a MSCI ESG rating of BB, and is the constituent of FTSE Emerging ESG Index and the TWSE Corporate Governance 100 Index. The issuance of this new bond is aligned with THSRC’s value and ESG commitments. The two underlying projects are the Yanchao project and the station passenger information display system (PIDS) upgrade. The Yanchao project is a green investment plan to reduce resource consumption and support renewable energy like solar power by accelerating the automation of equipment in Yanchao Main Workshop. Meanwhile, THSRC would integrate the PIDS with a broadcast system at each rail station to enhance customer welfare by delivering real-time schedules, weather forecasts, and emergencies to passengers.

    Apart from THSRC’s sustainable bond, there are other eight sustainable bonds listed on Taipei Exchange (TPEx), such as Bank Sinopac Financial Debenture and series of bonds issued by Goldman Sachs Finance Corporation. According to the TPEx announcement, the funds raised by a sustainable bond should be used for a combination of projects either qualified under Green Bond and Social Bond. Projects under the Green Bond categories mainly focus on emissions and pollution, energy and biodiversity issues, while Social Bond deals with matters like basic infrastructure and service, socioeconomic enhancement, and sustainable food systems etc. Moreover, in order to become a TPEx-listed sustainable bond issuer, a company should prepare and submit its Bond Framework and an assessment opinion or certification on the compliance to sustainable bond regulations of the TPEx within the prescribed period. After the issuance of bonds, TPEx also requires the issuer to provide an annual report and external assessment document on the report.

    Sources:

    https://www.msci.com/our-solutions/esg-investing/esg-ratings/esg-ratings-corporate-search-tool/issuer/taiwan-high-speed-rail-corporation/IID000000002186076

    https://www.ftserussell.com/products/indices/awalle

    https://www.thsrc.com.tw/event/Governance/2020THSRC_Introduction.pdf

    https://www.tpex.org.tw/web/bond/publish/sustainable/info.php?l=en-us

    https://www.tpex.org.tw/web/bond/knowledge/sustainable/introduction.php?l=en-us

    https://ctee.com.tw/livenews/aj/ctee/A00650002021083013522822

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