The Hong Kong government has raised $3.2 billion through green bonds denominated in US dollars, euros, and offshore yuan, in a bid to become a sustainable finance hub and promote the internationalisation of the Chinese currency.
The deal included a $1 billion three-year dollar bond, a €750 million ($819.75 million) seven-year bond, and a 10 billion yuan ($1.38 billion) bond with maturities of two, five, 10, 20 and 30 years, as reported by the Hong Kong Monetary Authority (HKMA).
The three-year US dollar bond yields 4.336% annually, the seven-year euro bond yields 3.379%, and the yuan bonds offer interest rates between 2.6% and 3.15%, depending on their duration. This offering attracted a diverse range of global investors, including central banks, sovereign wealth funds, private banks, and insurance firms, garnering over HK$120 billion equivalent in orders, according to a statement from Hong Kong’s facto central bank.
HKMA informed that the proceeds raised will be used to finance or refinance projects that provide environmental benefits and support sustainable development.
Financial Secretary Paul Chan highlighted the enthusiastic response from global institutional investors, emphasising Hong Kong’s efforts towards sustainable finance and the city’s low-carbon transformation.
HSBC, one of the leading managers in the deal said that the debut issuance of 20-year and 30-year green bonds denominated in yuan also marks a “significant milestone” in the city’s sustainable bond programme. Eugene Ng, managing director of debt capital markets and investment banking at HSBC Asia-Pacific said, “Hong Kong has not only extended the [offshore yuan] yield curve, but also become the first issuer other than China’s Ministry of Finance to publicly offer 20-year and 30-year [offshore yuan] bonds. This move supports the liquidity in the longer part of [offshore yuan] curve and has established a new benchmark for other issuers to emulate.”
According to the Climate Bonds Initiative, Hong Kong was Asia’s top issuer of climate-aligned government bonds and the fifth globally last year. This year, the borrowing ceiling for the government’s green and new infrastructure bond programme was raised to HK$500 billion to fund sustainable finance projects, aligning with the city’s climate goals of halving carbon emissions by 2035 and achieving net zero by 2050.