China Modern Dairy Holdings Ltd

Pioneering a New Path and Leading the Industry Towards Sustainable Development

As a traditionally “hard-to-abate” sector, the dairy industry often faces heightened scrutiny. Modern Dairy has taken a pioneering step in ESG financing through its "Sustainable Finance Framework". This framework received the Second Party Opinion (SPO) and SQS3 (Good) rating from the international rating agency Moody's. Notably, it was recognized as “Best Practices” in three dimensions: use of proceeds, project evaluation and selection processes, and management of raised funds. This provides a replicable model for future issuers and significantly enhances the ESG credibility of the entire industry.

This successful issuance demonstrates that even in "hard-to-abate" industries, robust frameworks and quantifiable impact can win the favor of the global ESG capital market, setting an important precedent for other traditional sectors seeking sustainable financing. At the same time, this transaction aligns closely with China's national priorities, such as the "dual-carbon" goals and rural revitalization. It not only advances Modern Dairy's own sustainable development but also sends a strong signal to the entire industry and regional markets about the transition toward ESG integration.

Overcoming Challenges to Achieve Outstanding Market Performance

The bond issuance took place in July 2025, amid market expectations of a global shift towards interest rate cuts, though the outlook remained uncertain. Coupled with ongoing foreign exchange volatility and fluctuating commodity prices, the issuance environment posed significant challenges. In the face of market turbulence, Modern Dairy leveraged its solid credit foundation, underpinned by its robust S&P BBB investment-grade issuer rating (with a stable outlook). Through detailed investor education and roadshow activities, the team proactively engaged with global investors, clearly demonstrating its commitments and plans in low-carbon development, water resource management, and community development. This successfully translated investors' recognition of its stable credit fundamentals and forward-looking ESG strategy into strong subscription demand.

Thanks to precise timing and efficient execution, the transaction was launched during a favorable market window and completed with a one-day book-building strategy. Ultimately, the issuance achieved unprecedented success:

• Oversubscription: The Final order book exceeded USD 1.2 billion, achieving 3.4 times oversubscription.

• Exceeded Size: Due to strong investor demand, the issuance size was increased from the initial USD 300 million to USD 350 million.

• Significant Price Tightening: The final pricing was tightened by 50 basis points from the initial price guidance, achieving "zero new issue premium," reflecting strong market confidence.

• Record-Setting: It set the tightest spread for any BBB-rated issuer in the Asia-Pacific food & beverage industry in 2025 to date.

Winning this prestigious award from FinanceAsia not only affirms the professionalism of our internal and external transaction teams but also recognizes Modern Dairy's long-term commitment to sustainable development. The success of this issuance secured critical funding for the company’s green and social responsibility projects, optimized its capital structure, and showcased the leadership of China’s dairy industry in the ESG field to the global market. We sincerely thank all investors for their trust and support, and this recognition will inspire us to continue creating long-term value for all stakeholders.

The successful bond issuance delivered a win-win outcome for all parties. It not only secured low-cost financing and broadened funding channels for Modern Dairy but also solidified its leadership as a pioneer in sustainable finance within the Asia-Pacific dairy industry, perfectly balancing economic benefits with environmental and social responsibilities.