Hong Kong has issued HK$10 billion worth of digital green bonds denominated in Hong Kong dollars, offshore yuan, US dollars, and euros, marking the largest digital bond issuance in the world.
Following a five-day virtual roadshow, the government has priced the HK$2.5 billion Hong Kong dollar tranche with a two-year tenor at 2.5 percent, the five-year 2.5 billion yuan (HK$2.73 billion) tranche at 1.9 percent, according to a statement from the Hong Kong Monetary Authority on Tuesday.
The US$300 million (HK$2.34 billion) bond with a three-year duration carried a coupon rate of 3.633 percent while the €300 million (HK$2.7 billion) debts had a 2.512 coupon and a four-year maturity.
The record size issuance of the digital bonds also drew more than HK$130 billion in the total subscription amount across four currency tranches.
The overwhelming subscription to Hong Kong’s third issuance of digital green bond reflected the market support for tokenized products, said Financial Secretary Paul Chan Mo-po.
The government will regularize the issuance of tokenized bond, support the establishment of comprehensive benchmarks, and promote innovative products and services for a wider application of digital finance, Chan said.
While retaining the key innovative features of the previous issuance, including issuing in a digitally native format, authorities also introduced the option to settle via tokenized central bank money alongside traditional settlement rails in the primary issuance process for the both local dollar and yuan tranches.
This also marks the first digital bond offering in the world that integrates tokenized central bank money in the form of e-yuan and e-HKD in the settlement process, helping further reduce settlement time, costs and counterparty credit risk.
The integration of tokenized central bank money in this issuance lays the foundation for future integration with other forms of digital money, fostering interoperability and unlocking new synergies across different digital infrastructures, said Eddie Yue Wai-man, chief executive of the HKMA.
This issuance will further consolidate Hong Kong’s status as a leading green and sustainable finance hub, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said.
