HKSAR Government’s Third Digital Green Bonds Offering

The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the HKSAR Government) today (11 November) announced the successful pricing of around HK$10 billion worth of digital green bonds (Digital Green Bonds) denominated in HK dollars (HKD), Renminbi (RMB), US dollars (USD) and euro (EUR) under the Government Sustainable Bond Programme. 

Following a virtual roadshow from 3 to 7 November, the Digital Green Bonds were priced on 10 November as follows:

• HKD2.5 billion 2-year tranche at 2.5%
• RMB2.5 billion 5-year tranche at 1.9%
• USD300 million 3-year tranche at 3.633%
• EUR300 million 4-year tranche at 2.512%

The latest issuance marks another milestone on the HKSAR Government’s bond tokenisation journey, following the two successful issuances in 2023 and 2024.  While retaining the key innovative features of the previous issuance, including issuing in a digitally native format, providing the option of investor access via traditional market infrastructure, and integrating green bond disclosures with the digital assets platform, the latest issuance has also introduced innovative features and achieved breakthroughs in the following areas:

• Integration of digital money in the settlement process:  For both the HKD and RMB tranches, the option to settle via tokenised central bank money was introduced alongside traditional settlement rails in the primary issuance process, which helped further reduce settlement time, costs and counterparty credit risk.  This also marks the first digital bond offering in the world that integrates tokenised central bank money in the form of e-CNY and e-HKD in the settlement process.    
• Expanding scale: This issuance achieved a record issuance size of HK$10 billion, with the total subscription amount across four currency tranches reaching over HK$130 billion, marking the largest digital bond issuance in the world to date.  Additionally, the tenor was extended to up to five years, addressing investor demand for longer-term digital bonds.  Alongside an increase in the number of direct participants to the digital assets platform and arranging banks, compared to the previous issuance, the number of investors also expanded markedly. In terms of investor type, the issuance continued to attract subscriptions by a wide spectrum of institutional investors globally, covering asset managers, banks, insurance companies, private banks and others, including a substantial number of first-time investors in digital bonds.
• Advancing adoption of global standards: Digital Token Identifiers (DTIs)¹, a global identification standard for digital tokens defined by the International Organisation for Standardisation’s ISO 24165 standard, were obtained for all tranches of the issuance.  The DTIs for this issuance are directly linked to the bonds’ International Securities Identification Numbers (ISINs) and to the issuer’s Legal Identity Identifier (LEI), embedding the bonds in the wider framework of global standards.

  Additionally, building on the second digital bond issuance, this issuance expanded on the adoption of the International Capital Market Association’s Bond Data Taxonomy² (BDT), with the aim of facilitating the consistent exchange of issuance information between different transaction parties and systems in traditional capital markets and the digital industry, thereby improving interoperability and fostering end-to-end automation.

Mr Paul Chan, the Financial Secretary, said, “The HKSAR Government’s third issuance of digital green bond attracted overwhelming subscription, with the issuance amount reaching a new high of HK$10 billion, reflecting the market support for tokenised products. A number of innovative features have also been introduced to further promote fintech empowerment in the development of bond market as well as green and sustainable finance market.  The Government will regularise the issuance of tokenised bond, support the establishment of comprehensive benchmarks, and promote innovative products and services for a wider application of digital finance.”

Mr Christopher Hui, the Secretary for Financial Services and the Treasury, said, “This is the third batch of tokenised green bond issuance by the Government, and the first after the announcement of the Government’s Policy Statement 2.0 on the Development of Digital Assets in Hong Kong to among other things regularise the issuance of tokenised Government bonds. Hong Kong is uniquely positioned to connect traditional finance to the digital asset era. Riding on our established strengths in financial services, this issuance will further consolidate Hong Kong’s status as a leading green and sustainable finance hub.”

Mr Eddie Yue, the Chief Executive of the Hong Kong Monetary Authority, said, “With each issuance of the HKSAR Government’s digital bonds since 2023, we have sought to further scale the market and explore new innovations, to reinforce the vision for Hong Kong to become a global hub for digital assets.  The integration of tokenised central bank money in this issuance lays the foundation for future integration with other forms of digital money, fostering interoperability and unlocking new synergies across different digital infrastructures.  We are also pleased to see a significant increase in market participation, with more banks and first-time digital bond investors actively participating in this issuance, a clear reflection of the progress made in scaling our digital bond market.”

Key features of the Digital Green Bonds

The clearing and settlement system of the Digital Green Bonds is the Central Moneymarkets Unit (CMU), with HSBC Orion as the digital assets platform.  HSBC, Bank of China (Hong Kong), Bank of Communications, BNP PARIBAS, Crédit Agricole CIB, ICBC (Asia), J.P. Morgan, Société Générale, Standard Chartered Bank, UBS, Allen Overy Shearman Sterling, Ashurst and Linklaters were involved in the preparation for the issuance (see Annex).

DISCLAIMER:

NOT FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW.

THIS ANNOUNCEMENT IS NOT MADE BEING MADE AVAILABLE IN, AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW. THIS ANNOUNCEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE LAWS. THERE WILL BE NO PUBLIC OFFERING OF SUCH SECURITIES IN THE UNITED STATES.