HKSAR Government Launches Multibillion Green Bonds Under Sustainable Bond Programme
In an ambitious move towards promoting environmental sustainability and reinforcing its position as a green finance hub, the Hong Government of the Hong Kong Special Administrative Region (HKSAR) significantly advanced its commitment through a successful multi-billion green bond offering.
On July 18, the HKSAR Government proudly announced the issuance of approximately HK$25 billion worth of green bonds. These bonds, which are an integral part of the Government Sustainable Bond Programme, are uniquely denominated in three major currencies: Renminbi (RMB), U.S. dollars (USD), and euros (EUR).
This issuance follows a compelling virtual roadshow that took place on July 16, 2024, hinting at the global interest and the diverse investor base keen on green investments. The offer, which was finalized on July 17, 2024, attracted overwhelming global attention with orders surpassing the HK$120 billion mark, signaling robust investor confidence and a keen interest in environmentally sustainable projects.
Especially notable in this offering was the introduction of 20-year and 30-year RMB Green Bonds, marking a pioneering step by the HKSAR Government. Notably, the 30-year bond represents the longest tenor RMB bond the government has so far issued, setting new benchmarks in the market and extending the offshore RMB yield curve significantly.
Financial Secretary Mr. Paul Chan emphasized the issuance as a key endeavor to expedite Hong Kong’s transition into a low-carbon economy and to cement its status as a leading center for green and sustainable finance. He highlighted the global institutional investors’ enthusiastic response, showcasing strong support for Hong Kong’s green initiatives and the strategic move to extend the offshore RMB product offerings through the inaugural issuance of 20-year and 30-year bonds.
The green bonds were issued under the HKSAR Government’s Global Medium Term Note Programme, specifically designed for green bond issuances, and initiated in early 2021. Expected to settle by July 24, 2024, the bonds will be listed on both the Hong Kong Stock Exchange and the London Stock Exchange, boasting credit ratings of AA+ by S&P Global Ratings and AA- by Fitch, reflecting their strong investment appeal.
Managed by the Hong Kong Monetary Authority on behalf of the HKSAR Government, the proceeds from these bonds are earmarked for the Capital Works Reserve Fund. This allocation will finance or refinance projects that not only offer environmental benefits but also contribute to sustainable development, resonating with global goals.
The Green Bond Framework, first published in March 2019 and updated in February 2022, underlines the government’s strategic approach in utilizing the proceeds from the green bonds. Designed to align with international standards and practices in the green bond market, the framework emphasizes funding projects that aid in the transition to a low carbon economy. Vigeo Eiris, now part of Moody’s ESG Solutions, has validated the framework’s alignment with green principles through the provision of a Second Party Opinion.
Moreover, the HKSAR Government’s green bond issuances have been certified by the Hong Kong Quality Assurance Agency, guaranteeing adherence to green and sustainable finance principles right from the pre-issuance stage. Till date, the government has published four annual reports showcasing the judicious use of the proceeds towards environmentally beneficial projects.
The overwhelming participation and the enthusiastic reception of Hong Kong’s green bonds by global investors underscore not only the city’s leading role in green finance but also the growing global momentum towards environmental sustainability and low carbon economic growth.
This venture serves as a meaningful leap towards not just Hong Kong’s environmental goals, but also towards a broader global impact, fostering a sustainable future for all.
