Hong Kong’s retail green bonds attract ‘record’ number of subscribers, subscription amounts amid ‘uncertainty in the local stock market’

The total subscription amount received by BOCHK for the notes exceeded ‘bank’s record last year’, executive says
Government says the subscription amount totalled about HK$30.20 billion (US$3.85 billion) with about 323,000 applications received

ESG investing

Mia Castagnone

Published: 9:25pm, 28 Sep 2023

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Hong Kong’s latest offering of retail green bonds has logged a “record” number of subscribers as well as record subscription amounts, as Hong Kong investors turn towards a safer investment option in a struggling stock market, banks managing the issuance said.

The government, meanwhile, said the subscription amount totalled about HK$30.20 billion (US$3.85 billion) with about 323,000 applications received. The numbers were obtained from placing institutions, a government spokesperson said. The figures are preliminary estimates and the final figure might be adjusted.

The government bonds with 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. The HK$15 billion notes up for sale guarantee a minimum payment of 4.75 per cent, an increase from last year’s batch that yielded 2.5 per cent.

HSBC and Bank of China (Hong Kong) (BOCHK) were appointed co-arrangers for the retail issuance by the government. BOCHK said the notes proved to be attractive for its customers.

“The total subscription amount of BOCHK’s green retail bonds exceeded our bank’s record last year, and the average customer subscription amount increased by more than 30 per cent compared with last year,” said Joyce Leung Mei-yee, an assistant general manager at the lender.

Green bonds are fixed-income financial products designed to fund projects that are environmentally friendly. The new notes, as well as other financing instruments launched under the government’s green bond programme, aim to enhance the government’s sustainable investment offerings and promote green finance.

Hong Kong’s latest retail green bond offering receives ‘positive’ response

As the retail green bonds have been well received by the public, the Hong Kong Monetary Authority is expected to raise the final issuance amount to HK$20 billion. The final allocation results will be released on October 6.

The current offering’s subscription period began on September 18 and ran until 2pm local time on Thursday. The bonds are set to be issued on October 10 before listing on the Hong Kong stock exchange the next day.

“For one-fifth of our green bond subscribers, it’s their first time taking up a government bond programme with us,” said Sami Abouzahr, head of wealth and investments solutions at HSBC Hong Kong. “There is growing interest [in green bonds,] and more demand for safe investment options, especially given the uncertainty in the local stock market.”

China’s green bonds lose their lustre as push to hit climate goals boosts supply

HSBC saw an increase of 25 per cent in average customer subscriptions, and a total subscription amount that was higher than the levels reached in 2022.

China Citic Bank International said the green retail bond subscription amount had increased by 30 per cent to an average of HK$100,000 this year compared with the previous batch.

The first batch of the government’s retail green bonds were announced in February 2022 and were sold out, attracting HK$32.88 billion from 493,000 people.

The proceeds from green bonds 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.

Such green projects include the district cooling system for Tung Chung New Town extension, the Kai Tak Sports Park and the replacement of the storm-detecting weather radar at Tai Mo Shan, according to the government’s website.

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