Hong Kong’s first retail green bond drops in trading debut, in a lacklustre start for backers of environmentally sustainable investment
- The three-year note started trading at HK$99.70 per HK$100 bond
- The bond offers a 2.5 per cent return on a minimum investment of HK$10,000
Hong Kong’s first green bond for retail investors slipped on its first day of trading, a disappointing start for supporters of environmentally sustainable investments following its oversubscription two weeks earlier.
The three-year note started trading at HK$99.70 per HK$100 bond on Thursday. The bond offers a 2.5 per cent return on a minimum investment of HK$10,000 (US$1,274). Its HK$20 billion offering was touted by Hong Kong’s government to be the biggest retail green bond issuance globally thus far.
“The selling pressure is a bit heavy because there are a lot of short-term players subscribing and selling on the first day, expecting to make 3 to 5 [Hong Kong dollars] on a HK$100 dollar bond,” said Louis Wong Wai-kit, director of Phillip Capital Management.
Still, the weak performance is not a major worry for retail investors that can hold until maturity, as “the returns are not bad, [given that it is] principal guaranteed,” Wong said.
The bond will pay interest every six months, based on the inflation rate over that half-year period. It is guaranteed at a minimum of 2.5 per cent, which is more generous than the minimum 2 per cent rate on similar inflation-linked bonds known as iBonds. The interest rate for its first payout will be determined on November 4 and issued on November 18.