Alvin Lang Jul 18, 2024 11:20
The HKSAR Government has issued HK$25 billion in green bonds, attracting global investors with over HK$120 billion in orders.
The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR Government) has successfully issued approximately HK$25 billion worth of green bonds, according to the Hong Kong Monetary Authority. The bonds are denominated in Renminbi (RMB), US dollars (USD), and euro (EUR) under the Government Sustainable Bond Programme.
Bond Offering Details
The green bonds were priced on July 17, 2024, following a virtual roadshow on July 16, 2024. The tranches were issued with the following terms:
- RMB 2 billion 2-year tranche at 2.60%;
- RMB 2 billion 5-year tranche at 2.70%;
- RMB 2 billion 10-year tranche at 2.80%;
- RMB 2 billion 20-year tranche at 3.05%;
- RMB 2 billion 30-year tranche at 3.15%;
- US$1 billion 3-year tranche at 4.336%; and
- EUR 750 million 7-year tranche at 3.379%.
The offering drew significant interest from a diverse range of global investors, with more than HK$120 billion equivalent in orders. Notably, the 20-year and 30-year RMB green bonds were offered for the first time, with the 30-year bond being the longest tenor RMB bond issued by the HKSAR Government to date, setting new benchmarks in the market.
Market Impact and Government Statements
Financial Secretary Paul Chan emphasized the importance of this green bond issuance in promoting Hong Kong's transition to a low-carbon economy and strengthening its position as a green finance hub. Chan stated, “The issuance of Government green bonds is an important initiative to promote Hong Kong's low-carbon transformation and consolidate Hong Kong’s development as a green and sustainable finance hub. Global institutional investors responded enthusiastically to the subscription of these Green Bonds, reaffirming our efforts on this front.”
The new bonds are expected to be settled on July 24, 2024, and will be listed on both the Hong Kong Stock Exchange and the London Stock Exchange. The green bonds have been assigned credit ratings of AA+ by S&P Global Ratings and AA- by Fitch.
Use of Proceeds and Framework
The proceeds from the green bonds will be allocated to the Capital Works Reserve Fund, which finances or refinances projects that provide environmental benefits and support sustainable development. The HKSAR Government’s Green Bond Framework, initially published in March 2019 and updated in February 2022, outlines the use of proceeds to fund projects that facilitate a low-carbon economy. The framework aligns with international standards and has received a Second Party Opinion from Vigeo Eiris, part of Moody’s ESG Solutions.
The Hong Kong Monetary Authority acted as the HKSAR Government’s representative in this offering. The list of Joint Global Coordinators, Joint Bookrunners, Joint Lead Managers, and Joint Green Structuring Banks is available in the Annex.
Investor Distribution
The distribution of investors by category is as follows:
| Category | RMB Green Bonds | USD Green Bonds | EUR Green Bonds |
|---|---|---|---|
| Banks | 71% | 57% | 48% |
| Central banks, sovereign wealth funds, and international organisations | 13% | 22% | 14% |
| Fund managers, private banks, insurance companies, and others | 16% | 21% | 38% |
The RMB and EUR green bonds were offered in Reg S format, while the USD green bonds were offered in 144A/Reg S format.
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