2018 - 2019 Edition of Citi Perspectives for the Public Sector

20 plant at the Mohamed bin Rashid Solar Park, Dubai. In Egypt, Citi supported the Beijing- based Asian Infrastructure Investment Bank’s solar project portfolio with the CitiDirect BE ® online banking platform, which provides robust financial controls and collateral administration across 13 project companies. Since 2015, China has also emerged as a leading proponent of green bonds. With almost no issuance in 2015, the following year China- domiciled issuers (ex-Hong Kong) printed $36 billion of green bonds. Total issuance from China in 2017 was $37 billion, making the country the second-largest source of green bonds in the world. China’s leading issuers are state-controlled Chinese policy banks, namely ICBC, China Development Bank and Bank of China (BOC). 6 A portion of the capital raised from these green securities will go towards BRI projects: in October 2017, ICBC issued the first BRI-targeted climate bond, a $2.1 billion three- tranche offer in USD and EUR. 7 Citi has acted as joint global coordinator and bookrunner for the ICBC and BOC on a total of $4.4 billion of BRI- related bond issuances in 2018. For over a decade, Citi has been at the forefront of the sustainable finance agenda. Citi is a founding member of the Green Bond Principles and has been a leading underwriter of green, social and sustainability bonds for many renewable energy, public transport, green building and water resource management projects in countries participating in the BRI. In May 2018, Citi was ratings advisor and joint bookrunner on Korea Water Resources Corporation’s $300 million “water bond” to finance water management assets. Three months earlier, Citi was joint bookrunner on Indonesia’s $3.0 billion debut green issuance, which was in an Islamic sukuk format. Citi brings its global platform and deep local knowledge to transactions in almost any BRI-participating country. A Digital Belt and Road A March 2015 Chinese government white paper articulating the vision for the BRI called for the expansion of online trade and communications networks to develop “an information Silk Road” along the BRI routes. 8 The concept was later mentioned in the joint communiqué that followed China’s 2017 debut Belt and Road Forum: the international signatories committed to support “innovation action plans for e-commerce, digital economy, smart cities and science and technology parks.” 9 A focus on information communication technology is an integral component of a modern investment program focused on global connectivity and greater efficiency. By its nature, the BRI invites innovations in digital payments, distributed ledgers and smart contracts. International infrastructure projects with diverse financing and implementation partners are complex, involving cross-border payments, multi-country and -currency account structures and multilingual agreements. Citi supports the Digital BRI by providing efficient, technology- enabled solutions to these challenges. In 2016, 12% of China’s outbound investment went to technology companies, and this percentage is expected to grow as Beijing prioritizes high-tech industries and manufacturing. 10 Although it is difficult to quantify the portion of these outbound funds included within the BRI, China’s foreign investments in technology target both hard infrastructure and intangibles. The physical component of the Digital BRI is manifest in the rapid expansion of undersea fiber optic cable, improving China’s data connectivity to the rest of the world. In tandem, a wave of China’s private sector tech leaders are deploying their capital overseas under the BRI banner by investing into startups in BRI countries and expanding operations abroad. China’s 6 Meng, Alan Xiangrui, et al. (2018) China Green Bond Market 2017. Climate Bonds Initiative. https://www.climatebonds.net/files/reports/china_annual_report_2017_en_final_14_02_2018.pdf 7 Bourse de Luxembourg. (2017) “ ICBC lists its inaugural ‘Belt and Road’ climate bond in Luxembourg. ” https://www.abbl.lu/2017/10/30/icbc-lists-its-inaugural-belt-and-road-climate-bond-in-luxembourg/ 8 National Development and Reform Commission (2015) “ Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road, ” http://milano.china-consulate.org/eng/xwdt/t1254263.htm 9 Xinhua (2017) “ Joint Communique of leaders’ roundtable of Belt and Road forum, ” http://www.xinhuanet.com/english/2017-05/15/c_136286378.htm 10 MOFCOM and China Global Investment Tracker, American Enterprise Institute Citi supports the Digital BRI by providing efficient, technology- enabled solutions to these challenges. The Belt and Road Initiative Five Years In: Making the Most of China’s International Investment Program