Hong Kong raises record US$6 billion from green bond offering as city pushes ahead with its sustainable finance hub ambitions

Combined offering of green bonds in US dollar, euro, offshore yuan topped previous record of US$5.75 billion multicurrency deal in January
Financial Secretary Paul Chan said investor enthusiasm for the offering shows their recognition of the city’s sustainable development efforts

Business of climate change

Martin Choi

Published: 6:30pm, 1 Jun 2023

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Hong Kong has made its biggest green bond issuance, raising US$6 billion in a multicurrency deal as part of the government’s push to establish the city as an international green financing hub.

The offering included dollar bonds worth US$2.25 billion maturing in three, five and 10 years, €1.5 billion (US$1.6 billion) of four- and nine-year tranches and 15 billion yuan (US$2.2 billion) of two-, five- and 10-year notes.

The sale topped the city’s US$5.75 billion multicurrency green bond offering in January, which was the largest environmental, social and governance bond issuance in Asia at the time.

The offering has been well received and attracted close to US$30 billion in orders from a wide spectrum of investors, according to a statement on Thursday evening by the Hong Kong Monetary Authority, which acted as the government’s representative in the offering.

“The enthusiasm for Hong Kong green bonds from global investors shows their recognition of Hong Kong’s efforts in green and sustainable development,” said Financial Secretary Paul Chan Mo-po in a statement on Thursday.

“The offering has included our first 10-year RMB green bond, which helps to extend the offshore RMB yield curve and continues to enrich offshore RMB product offerings, promoting RMB internationalisation in an orderly manner,” said Chan. “We will continue to regularly issue green bonds to promote innovation and further development of the market.”

The green bonds are expected to be settled on June 7, and listed on the Hong Kong stock exchange as well as the London Stock Exchange, according to the HKMA.

Financial Secretary Paul Chan Mo-po said in his 2023 budget speech in February that the government planned to issue HK$15 billion (US$1.9 billion) of retail green bonds in the financial year that started April 1. The government raised HK$20 billion from the sale of such debt last year.

Financial Secretary Paul Chan Mo-po speaks at the 2nd World Chinese Accountants Conference in Wan Chai on May 23. Photo: Jonathan Wong

Crédit Agricole CIB and HSBC acted as joint global coordinators, joint lead managers and joint bookrunners for all tranches of the offering.

Green bonds are fixed-income securities designed to fund environment-friendly projects. Hong Kong plans to increase the use of wind, waste-to-energy and solar power to generate electricity in the coming years, as part of its push to reach carbon neutrality by 2050, according to its climate action plan unveiled in October 2021.

The Hong Kong government has issued almost US$16 billion of green bonds since the inaugural deal in 2019, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said at an industry conference last month.

In February, Hong Kong issued HK$800 million worth of tokenised green notes, the first such sale by a government globally, paving the way for digital bond offerings in the city.

On Tuesday, the HKMA also launched a discussion paper to gather feedback from stakeholders on developing a local “green taxonomy” framework for classifying economic activities considered environmentally friendly or sustainable.

A green classification framework for adoption in the local market would “help underpin Hong Kong’s instrumental role in bridging green financial flows between the mainland and the rest of the world, and hence strengthening Hong Kong’s status as an international green finance hub,” according to the HKMA’s discussion paper entitled Prototype of a Green Classification Framework for Hong Kong.

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