HK$100 billion green bond plan to establish Hong Kong as global hub, says monetary authority

A planned HK$100 billion (US$12.74 billion) green bond programme and other initiatives are expected to encourage more issuances in Hong Kong by mainland China and overseas companies, which in turn are expected to raise the city’s profile globally, Hong Kong Monetary Authority executives and banking officials said during a media briefing on Monday.

Hong Kong is Asia’s fourth largest bond issuance centre after Japan, mainland China and South Korea.

Helen Wong Pik-kuen, chief executive for Greater China at HSBC, said at the briefing: “The Hong Kong government’s planned HK$100 billion green bond programme, which will be the world’s largest sovereign green bond issuance programme, will play an important role in establishing Hong Kong as an international green finance hub.”

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She pointed out that 13 green bonds, issued in the city by the likes of Swire Properties, Bank of China, World Bank and others, had raised a total of US$5 billion.

Vincent Lee, executive director (external) at the HKMA, said: “We are confident bond issuances will increase in Hong Kong. We are positive about the ranking of Hong Kong as a bond issuance hub in Asia.”

Paul Chan Mo-po, Hong Kong’s financial secretary, had said in February the city would issue green bonds to expand the local bond market. The green bonds programme, which will be used to fund “green public works” projects, is before the Legislative Council for approval, after which one or more bond arrangers will be appointed to handle the sale.

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“The government’s green bond programme will be a long-term project. It will issue different batches of green bonds when the right projects arise. This will attract mainland and international green issuers to Hong Kong. Investors who like to invest in these green bond products will also come to Hong Kong,” said Lee.

Besides green bonds, Hong Kong has also acted as a hub for Chinese foreign currency bonds – foreign bonds worth US$220 billion have been issued in Hong Kong.

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Lee said mainland and international issuers like to issue bonds in the city because of its market liquidity and regulatory environment. “Hong Kong has always acted as a gateway between the mainland and international markets. We are intermediaries in 60 per cent of direct inward and outward investment bound for China. We are optimistic about the growth of Chinese companies issuing conventional and green bonds in Hong Kong,” he said.

HSBC’s Wong said the bond connect programme launched in July last year would also allow Hong Kong to act as a gateway to the mainland bond market.

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Herbert Hui, the MTR finance director, said green bonds issued by the company in Hong Kong had attracted a lot of foreign investors.

“There are a lot of fund managers taking green investment very seriously. They support our green bond issuance, as one MTR can carry passengers equal to either 1,500 cars, or 25 buses,” said Hui.