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Proceeds from the green bond sale will go to the city’s Capital Works Reserve Fund to finance or refinance public works projects that provide environmental benefits and support the sustainable development of Hong Kong. Photo: Felix Wong
BusinessBanking & Finance

In a first, Hong Kong to issue green bonds worth US$768 million to city’s retail investors

  • The bonds, which will have a tenor of three years, guarantee a minimum payment of 2 per cent
  • Hong Kong identity card holders will be able to subscribe in HK$10,000 increments starting March 1
Green bonds
Martin Choi
Martin Choi
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Hong Kong will issue retail green bonds worth up to HK$6 billion (US$768.8 million) beginning March 1, allowing residents to participate in the sustainable development of the city, the government said on Tuesday.

The bonds, which will have a tenor of three years, will make an interest payment every six months based on the average rate of the consumer price index over that half-year period, with a guaranteed minimum payment of 2 per cent.

Hong Kong identity card holders will be able to subscribe in HK$10,000 increments at placing banks, securities brokers or the Hong Kong Securities Clearing Company beginning at 9am on March 1, Edmond Lau Ying-pan, deputy CEO of the Hong Kong Monetary Authority, said during a media briefing on Tuesday afternoon.

The subscription period will run through 2pm on March 11, with the bonds being issued on March 22 and listing on the Hong Kong stock exchange the next day.

Green bonds are fixed-income financial products designed to fund projects that are environmentally friendly. 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 the special administrative region’s latest climate action plan unveiled in October.

The bonds will allow residents to “directly contribute to greening Hong Kong and share the fruit of the sustainable development of Hong Kong through participating in the green and sustainable finance market”, Financial Secretary Paul Chan Mo-po told the briefing.

“This inaugural retail green bond issuance marks another important milestone in the development of the local green finance market,” he said, adding that the government had already issued around US$7 billion in green bonds targeting institutional investors.

Proceeds from the green bond sale will go to the city’s Capital Works Reserve Fund to finance or refinance public works projects that provide environmental benefits and support the sustainable development of Hong Kong.

The financial secretary first announced the government’s green bond programme in the 2018-19 budget. The programme is aimed at developing Hong Kong into an international green finance hub and at combating climate change. In January last year, the government completed the sale of a second batch of green bonds totalling US$2.5 billion. This batch was not open to retail investors.

HSBC and Bank of China (Hong Kong) are acting as co-arrangers appointed by the government for the retail issuance.

“Global investors have been steadily flocking to environmental, social and [corporate] governance [ESG] assets, as the Covid-19 pandemic and increasing evidence of climate change have put these issues in the spotlight. This groundbreaking offer opens up an opportunity for the general public to invest directly in our city’s green future,” Luanne Lim, HSBC’s Hong Kong CEO, said in a statement.

“It also supports two important aspirations of Hong Kong, namely carbon neutrality by 2050 and green finance leadership in the region,” she added.

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