Hainan Province issued its fifth offshore yuan-denominated local government bonds in Hong Kong on Tuesday, with a total issuance of up to 5 billion yuan (HK$5.84 billion), including its first education-themed bonds as well as sustainable and blue bonds.
To enhance the bonds’ attractiveness to investors, they will be included as eligible collaterals for the Hong Kong Monetary Fund’s yuan liquidity facility, while bond interest and disposal income will be exempt from Hong Kong profits tax and stamp duty, as well as mainland individual income tax, corporate income tax, and stamp duty. The bonds will also be listed on the Stock Exchange of Hong Kong, and pricing is scheduled to announce on Wednesday.
The funds raised will be allocated to protecting marine ecosystems, upgrading healthcare infrastructure, and other priority projects—highlighting the blue-economy and sustainability strengths of Hainan’s Free Trade Port.
Deputy director of the Department of Finance of Hainan Province Zhang Xue noted that Hainan has continued to strengthen its “Study in Hainan” brand, and the first education-themed bond can especially support the Hainan Lingshui Li’an International Education Innovation Pilot Zone.
The issuance comprises a three-year sustainable bond tranche, a five-year blue bond tranche, and a ten-year education-themed bond tranche.
Settlements will continue to be processed through the Hainan Free Trade Port’s multifunctional free trade account (EF account), a mechanism designed to accelerate cross-border transactions. To date, the EF account has facilitated more than 600 billion yuan in business volume and supported trade and investment settlements with 105 countries and regions, covering cross-border trade, financing, direct investment, and related activities.
Deputy Financial Secretary Michael Wong Wai-lun said that Hong Kong continues to be a premier destination for the offshore yuan bond market, which currently handles approximately 75 percent of global offshore yuan settlement. As of June this year, Hong Kong’s yuan deposits, including certificates of deposit, had approached 1.3 trillion yuan.
Wong said Hainan has issued a total of 18 billion yuan in bonds in Hong Kong over the past four years. Including this year's issuance, the milestone underscores deepening Hainan-Hong Kong financial cooperation. He said the move highlights the Hainan Free Trade Port's progress and Hong Kong's role as a bridge between international capital and the mainland, providing overseas investors with risk management tools. With the city's offshore yuan market expanding, he expects more mainland institutions to issue bonds in Hong Kong, expanding yuan internationalization.
Zhang said the region’s GDP surpassed 800 billion yuan in 2025, and after the region’s customs closure, 18 tax preferential policies were implemented, forming a matrix centered on zero tariffs, focused on low tax rates, and highlighted by tax-free shopping.
As offshore yuan financing costs have fallen and the Chinese government has opened up more domestic funds to invest in offshore bonds, a growing number of issuers are flocking to the dim sum bond market.
Wong noted that China’s Ministry of Finance issued 6 billion yuan in green sovereign bonds in Hong Kong for the first time in May. In addition, as of July this year, the Hong Kong government has cumulatively issued 111.1 billion yuan under the Government Sustainable Bond Programme and the Infrastructure Bond Programme.
