The Ministry of Finance made its first issuance of a renminbi-denominated sovereign green bond in the Hong Kong Special Administrative Region, highlighting the important role of Hong Kong's "Finance+" development strategy, with finance being leveraged to serve and contribute to the country's high-quality development, Financial Secretary Paul Chan Mo-po said.
The bond’s total issuance size is 6 billion yuan ($886.5 million), comprising 3 billion yuan with a three-year tenor (finally priced at 1.42 percent) and another 3 billion yuan with a five-year tenor (finally priced at 1.56 percent). The bond will be listed on the Hong Kong stock exchange and net proceeds from this sale will be allocated to eligible green expenditure under the central government’s budget.
The bond has received a favorable market response, with a total subscription amount of HK$62.4 billion ($8 billion), with subscription multiples for the three-year and five-year tenor reaching 9.8 times and 11 times respectively.
“This inaugural issuance of green sovereign bond will further refine the yield curve of Hong Kong's offshore renminbi bond market, provide a new investment benchmark for international funds, attract more cross-border renminbi financing and transactions to be conducted in Hong Kong, and further consolidate and enhance Hong Kong's function as an offshore renminbi hub,” Chan said at the issuance ceremony on Friday.
The Ministry of Finance has been issuing renminbi-denominated sovereign bonds in the special administrative region for 18 consecutive years, with a cumulative issuance amount exceeding 460 billion yuan. As the world's largest offshore renminbi business hub, Hong Kong handles approximately 75 percent of global offshore renminbi payments and settlements, with its offshore renminbi liquidity pool reaching close to 1.2 trillion yuan.
The finance chief added that the SAR will fully align with national strategies, continuously strengthen the construction of its offshore renminbi market infrastructure, enhance market liquidity, and continuously enrich renminbi-denominated investment products and risk management tools, under the "one country, two systems" framework.
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The issuance will efficiently connect global funds with the country’s high-quality green projects that will promote green transformation and bring reasonable returns to investors, he said.
“Hong Kong has been ranked first in Asia in terms of its green bond issuance amount for eight consecutive years and is a leading green finance center in Asia, with a market share of approximately 40 percent in the region. We have actively promoted the issuance of digital green bonds, the development of insurance-linked securities including catastrophe bonds, and the establishment of transition finance classification standards,” Chan said.
The finance chief added Hong Kong is also actively guiding international capital to support the research and application of artificial intelligence and various green technologies in carbon reduction and emissions reduction, building a thriving "finance + technology + green" ecosystem.
David Liao, HSBC’s co-CEO for Asia and the Middle East, said this issuance conveys the message to international investors that the Chinese mainland is committed to continuous efforts for proactively promoting the green and low-carbon transformation.
According to a survey by HSBC released in May, the renminbi is expected to account for 7.2 percent in global foreign exchange reserves by 2035, higher than the 6.5 percent predicted in last year's survey.
“This expectation of an increase of renminbi proportion in global foreign exchange reserves, coupled with the growing popularity of high-quality renminbi assets among sovereign wealth fund investors, is mutually reinforcing,” Liao said at the ceremony.
