The government of Hong Kong has announced the successful offering and subscription of more than $750 Million worth of digital green bonds in four currencies, with pricing ranging from 2.9% to 4.7%.
The two-year bonds were offered in Hong Kong dollars, China's renminbi, U.S. dollars, and euros as a part of the Government Green Bond Program, established to promote green financing in Hong Kong. Proceeds from the program will reportedly be used to finance government projects with environmental benefits attached.
In general, green bonds are used to fund projects related to sustainable development, and digital green bonds include a digital platform for bond issuance in order to reduce costs and improve liquidity.
“The Government has once again issued digital green bonds this year, incorporating various technological innovations,” said Paul Chan, financial secretary for the Hong Kong special administrative region of the People’s Republic of China. “This demonstrates Hong Kong’s strengths and leadership position in combining the bond market, green and sustainable finance, as well as fintech. We will continue to promote innovation and application of fintech, explore the use of new technologies to enhance the efficiency, transparency, and security of financial transactions, and foster vibrant development in various sectors of the financial market.”
This bond issuance is the second since the Hong Kong government’s first green bonds were issued in February 2023, and it reportedly builds on Project Genesis, a concept test of the issuance of tokenized green bonds in Hong Kong done in 2021.
The present bonds reportedly achieved broadened investor participation and streamlined issuance -- international investors can access the digital green bonds from online accounts, and bonds did not have to be initially issued in traditional securities before being converted into a digital format. Further, the new bond issuance included standardization efforts to promote market efficiency and smooth cross-system operations.
These are reportedly the first green bonds to adopt the International Capital Market Association’s bond data taxonomy, and all key green bond documentation may be accessed on the digital assets platform.
With sustainable investment on the rise alongside concerns over corporate greenwashing, digital green bonds may reportedly allow for improved transparency and traceability of corporate green finance initiatives.
