HKSAR Government’s Third Digital Green Bonds Offering
*****************************************************
The following is provided on behalf of the Hong Kong Monetary Authority:
The Government of the Hong Kong Special Administrative Region of individuals’s Republic of China (the HKSAR Government) today (November 11) revealed the effective prices of around HK$ 10 billion worth of digital green bonds (Digital Green Bonds) denominated in HK dollars (HKD), Renminbi (RMB), United States dollars (USD) and euro (EUR) under the Government Sustainable Bond Programme.
Following a virtual roadshow from November 3 to 7, the Digital Green Bonds were priced on November 10 as follows:
- HKD2.5 billion 2-year tranche at 2.5 percent
- RMB2.5 billion 5-year tranche at 1.9 percent
- USD300 million 3-year tranche at 3.633 percent
- EUR300 million 4-year tranche at 2.512 percent
The current issuance marks another turning point on the HKSAR Government’s bond tokenisation journey, following the 2 effective issuances in 2023 and 2024. While keeping the essential ingenious functions of the previous issuance, consisting of providing in a digitally native format, supplying the alternative of financier gain access to by means of conventional market facilities, and incorporating green bond disclosures with the digital possessions platform, the current issuance has actually likewise presented ingenious functions and attained developments in the following locations:
- Combination of digital cash in the settlement procedure: For both the HKD and RMB tranches, the alternative to settle through tokenised reserve bank cash was presented together with conventional settlement rails in the main issuance procedure, which assisted even more minimize settlement time, expenses and counterparty credit danger. This likewise marks the very first digital bond offering on the planet that incorporates tokenised reserve bank cash in the kind of e-CNY and e-HKD in the settlement procedure.
- Broadening scale: This issuance accomplished a record issuance size of HK$ 10 billion, with the overall membership quantity throughout 4 currency tranches reaching over HK$ 130 billion, marking the biggest digital bond issuance worldwide to date. In addition, the tenor was encompassed approximately 5 years, resolving financier need for longer-term digital bonds. Together with a boost in the variety of direct individuals to the digital properties platform and setting up banks, compared to the previous issuance, the variety of financiers likewise broadened considerably. In regards to financier type, the issuance continued to draw in memberships by a large spectrum of institutional financiers worldwide, covering property supervisors, banks, insurer, personal banks and others, consisting of a significant variety of newbie financiers in digital bonds.
- Advancing adoption of worldwide requirements: Digital Token Identifiers (DTIs) (Note 1), an international recognition requirement for digital tokens specified by the International Organisation for Standardisation’s ISO 24165 requirement, were acquired for all tranches of the issuance. The DTIs for this issuance are straight connected to the bonds’ International Securities Identification Numbers and to the provider’s Legal Identity Identifier, embedding the bonds in the broader structure of worldwide requirements.
In addition, constructing on the 2nd digital bond issuance, this issuance broadened on the adoption of the International Capital Market Association’s Bond Data Taxonomy (BDT) (Note 2), with the goal of helping with the constant exchange of issuance details in between various deal celebrations and systems in conventional capital markets and the digital market, therefore enhancing interoperability and cultivating end-to-end automation.
The Financial Secretary, Mr Paul Chan, stated, “The HKSAR Government’s third issuance of digital green bond attracted overwhelming subscription, with the issuance amount reaching a new high of HK$10 billion, reflecting the market support for tokenised products. A number of innovative features have also been introduced to further promote fintech empowerment in the development of bond market as well as green and sustainable finance market. The Government will regularise the issuance of tokenised bond, support the establishment of comprehensive benchmarks, and promote innovative products and services for a wider application of digital finance.”
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, stated, “This is the third batch of tokenised green bond issuance by the Government, and the first after the announcement of the Government’s Policy Statement 2.0 on the Development of Digital Assets in Hong Kong to among other things regularise the issuance of tokenised Government bonds. Hong Kong is uniquely positioned to connect traditional finance to the digital asset era. Riding on our established strengths in financial services, this issuance will further consolidate Hong Kong’s status as a leading green and sustainable finance hub.”
The Chief Executive of the Hong Kong Monetary Authority, Mr Eddie Yue, stated, “With each issuance of the HKSAR Government’s digital bonds since 2023, we have sought to further scale the market and explore new innovations, to reinforce the vision for Hong Kong to become a global hub for digital assets. The integration of tokenised central bank money in this issuance lays the foundation for future integration with other forms of digital money, fostering interoperability and unlocking new synergies across different digital infrastructures. We are also pleased to see a significant increase in market participation, with more banks and first-time digital bond investors actively participating in this issuance, a clear reflection of the progress made in scaling our digital bond market.”
Secret functions of the Digital Green Bonds
The cleaning and settlement system of the Digital Green Bonds is the Central Moneymarkets Unit (CMU), with HSBC Orion as the digital possessions platform. HSBC, Bank of China (Hong Kong), Bank of Communications, BNP PARIBAS, Crédit Agricole CIB, ICBC (Asia), J.P. Morgan, Société Générale, Standard Chartered Bank, UBS, Allen Overy Shearman Sterling, Ashurst and Linklaters were associated with the preparation for the issuance (see Annex).
Vigeo Eiris has actually supplied a Second Party Opinion on the Government’s Green Bond Framework. The Digital Green Bonds have actually likewise gotten the Green and Sustainable Finance Certification Scheme Pre-issuance Stage Certificate from the Hong Kong Quality Assurance Agency
DISCLAIMER:
NOT FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW.
THIS ANNOUNCEMENT IS NOT MADE BEING MADE AVAILABLE IN, AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW. THIS ANNOUNCEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”OR THE LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE LAWS. THERE WILL BE NO PUBLIC OFFERING OF SUCH SECURITIES IN THE UNITED STATES.
Keep in mind 1: A DTI distinctively recognizes the digital token and unambiguously connects it to the dispersed journal it is released on.
Keep in mind 2: The BDT is a standardised and machine-readable language of essential financial regards to a bond (such as quantities, currency, maturity, interest), essential dates (such as rates, settlement) along with other pertinent details (such as governing law, appropriate celebrations, scores, offering limitations) usually consisted of within a term sheet.
Keep in mind 3: The Digital Green Bonds are cleared and settled through the CMU, and the settlement of deals made through the CMU gain from statutory settlement finality under Hong Kong law.