With stocks and bonds falling globally, it should not be surprising that Hong Kong’s first green bond for retail investors slipped slightly on its debut. Even without the current volatility over outlooks on the global economy, local selling pressure was bound to be tremendous when punters were eager to make a quick buck rather than waiting for the semi-annual interest payment. For conservative or long-term investors, though, it will make no difference as long as they hold the inflation-linked bonds to maturity in three years. They can safely ignore the short-term volatility with a financial instrument that is also designed to protect the principal. Despite the lacklustre debut, the bonds were actually well-received. Some 493,000 investors poured HK$32.88 billion (US$4.19 billion) into the offering, equivalent to an oversubscription rate of 1.2 times. Interest payment will be based on the inflation rate over the past half-year period, with a guaranteed minimum of 2.5 per cent. That is more generous than the 2 per cent rate guaranteed with the last government-issued, inflation-linked iBonds. Hong Kong’s first retail green bond marks lacklustre trading debut Local inflation stood at 1.7 per cent in March, while the government forecast inflation at 2 per cent for the whole of this year. Rising inflation, of course, has become a worldwide concern, contributing to crushed stock markets and casting a pall over major economies, including China’s. The bond not only offers small investors a steady return, it will also help broaden the variety of green and sustainable financial products in Hong Kong. It has been touted as the biggest retail green bond issuance globally so far this year. The city is well-placed to become a premier green finance hub. The government previously released US$7 billion worth of green bonds to institutional investors. The fund raised is expected to be used for environmentally friendly projects, among which are those for wind and solar power, and waste-to-energy projects for electricity as Hong Kong is committed to achieve carbon neutrality by the middle of this century. Given the long experience with issuing the iBonds for local investors, finance officials have done well with such investment vehicles that can provide safety and a steady income, and a reliable means to raise capital to help protect the environment.