First retail green bond targets $6b

The Hong Kong government will issue up to HK$6 billion worth of retail green bonds for the first time, with proceeds from the sale used for sustainable projects in the city, Christopher Hui, secretary for financial services and treasury said yesterday.

Under the terms of the deal, the three-year bonds will pay an interest rate every six months tied to inflation, of at least 2 percent.

The minimum investment is HK$10,000 and can be subscribed from 9am on March 1 till 2pm on March 11.

Although the green bonds' terms and conditions are similar to those of the iBond, the inflation-linked government bond, the funds raised from the green bond will directly go to promote green projects such as renewable energy, waste management, Hui said

The Hong Kong Government will announce the subscription results on or before March 18 and the bonds will be listed on the Stock Exchange on March 23.

HSBC and Bank of China (Hong Kong) are the joint arrangers for the retail bond sale.

BOCHK said the first retail green bonds issued by the government will be well-received among investors, expecting it will be over-subscribed by eight to 10 times.

Meanwhile, HSBC said it will offer seven fee waivers to retail subscribers of green retail bonds this time, adding that it has issued six tranches of retail green certificate of deposits in Hong Kong since December in 2019, which attracted over HK$2 billion subscription.

Kenny Wen Kit, a wealth management strategist at Everbright Securities International, expects the response to the bonds will be close to that of the iBonds as the terms are similar and not all investors will be concerned about how the funds are used.

But he says it's an opportunity for investors who prefer sustainability investing and hope to hedge against inflation.

The city last year raised US$1 billion selling 10-year green dollar bonds at 1.75 percent and sold five billion yuan (HK$6.15 million) in green debt at 2.8 percent and 3 percent over three and five years.

Hong Kong has sold US$7.2 billion in green bonds in all - including its first sales in euros last year - and aims to sell an additional HK$175.5 billion in sustainable debt over the next five years.