This undated photo shows the building of the Hong Kong Monetary Authority. (PHOTO / IC)

Hong Kong Monetary Authority is endeavoring to woo businesses from the Middle East to issue international and offshore yuan-denominated dim sum bonds in the city, as the oil-rich region looks to shift some of its investments away from the European and American markets to mitigate risks.

Darryl Chan Wai-man, HKMA’s deputy chief executive, cited the fact that one-third of international bonds in Asia were issued in Hong Kong, saying the city is in the best position for the Middle East to reach Asian investors, with the launch of Southbound Bond Connect — a channel allowing professional investors in the Chinese mainland to build up holdings in the offshore debt market through Hong Kong.

Hong Kong’s ripe bond issuance mechanism and the extensive investor network of local financial institutions could effectively help issuers from the Middle East to target Asian investors, said Darryl Chan Wai-man, HKMA’s deputy chief executive

Chan was one of the Hong Kong Special Administrative Region’s official delegates to visit Saudi Arabia and the United Arab Emirates last week.

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According to HKMA, Hong Kong, as a leading bond hub in Asia, ranks third in terms of bond issuance in the region (excluding Japan), after the Chinese mainland and Korea.

Chan added that Hong Kong’s ripe bond issuance mechanism and the extensive investor network of local financial institutions could effectively help issuers from the Middle East to target Asian investors.

Rating agency S&P Global Ratings issued a report last week that supported expectations of a “strong pipeline” of sustainable bonds coming from the Middle East this year. Last October, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, listed its debut $3 billion green bond on the London Stock Exchange. The issuance was more than eight times oversubscribed.

Having issued three rounds of Islamic bonds, Hong Kong has already established a framework for the product, Chan said.

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The HKMA is also planning to organize a high-level financial delegation to visit the Middle East as early as the first half of this year to hold further talks with central banks in the region.

Contact the writer at evanliu@chinadailyhk.com