Ceiling rises make for Bonds boom

Top News | Victor Zhong 25 Feb 2021

Hong Kong is to lift the borrowing ceiling of the government's bond program from HK$200 billion to HK$300 billion with the expansion of green bonds, bonds and silver bonds, says Paul Chan.

The proposed move is aimed at allowing sufficient room for bond issuance.

This comes as the financial hub plans to issue green bonds regularly and expand the scale of the government's green bond program.

"We propose to double the borrowing ceiling of the program to HK$200 billion to allow for further issuance of green bonds totaling HK$175.5 billion within the next five years, with regard to the market situation," Chan said.

"This will also give us more room to pilot issuance of green bonds that involve more types of currencies, project types and issuance channels, thereby further enriching the green finance ecosystem in Hong Kong."

Chan said the government will continue to promote the development of green finance, encourage institutions to conduct investment, financing and certification activities and attract top-notch institutions and talent to provide the relevant services.

Meanwhile, the SAR will issue no less than HK$24 billion of Silver Bonds for residents aged 60 or above and no less than HK$15 billion of the inflation-linked retail bond, the so-called iBond, this year. This suggests it will lower the eligible age for Silver Bond subscriptions from 65 to 60.

As the global low-interest-rate environment is expected to remain for a long time, many people are seeking a stable and reliable return on investment, says Chan.

This came as the Hong Kong Monetary Authority and the People's Bank of China set up a working group to drive the initiative of Southbound Trading of Bond Connect, with the target of launching it within the year.

To that end, the authority will enhance the efficiency and capacity of the domestic Central Moneymarkets Unit and introduce new functions to cope with the increasing market demand for Northbound Trading of Bond Connect and support its future commissioning of Southbound Trading.

This provides a risk-controlled channel for mainland investors to participate in local and overseas bond markets.

Chan is also proposing to issue retail green bonds for the public to invest in.

He will lead a steering group - comprising members from the Financial Services and the Treasury Bureau, the HKMA, the Securities and Futures Commission, the Insurance Authority and Hong Hong Kong Exchanges and Clearing - to "formulate a roadmap for promoting the diversified development of Hong Kong's bond market and reinforcing its functions."

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