The Government of the Hong Kong Special Administrative Region has priced its inaugural tokenized green bond offering amounting to HK$800 million (US$102 million), the first such issuance by a government globally.
The one-year, Hong Kong dollar-denominated bond was issued under the government’s green bond framework. Following a virtual roadshow earlier this week, it was priced on February 15 at a coupon rate of 4.05%
Proceeds will be used to finance/refinance projects that fall under the eligible categories set out in the green bond framework.
Bank of China (Hong Kong), Crédit Agricole CIB, Goldman Sachs, and HSBC acted as joint global coordinators, lead managers, and bookrunners.
The Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA) is the clearing and settlement system for the bond, leveraging Goldman Sachs’ tokenization platform GS DAP.
The primary issuance was settled on a delivery-versus-payment (DvP) basis between securities tokens representing beneficial interests in the bond and cash tokens representing a claim for HKD fiat against the HKMA, on a T+1 basis across a private blockchain network.
Processes of the bond lifecycle, including coupon payment, settlement of secondary trading, and maturity redemption, will also be digitalized and performed on the private blockchain network.
The government notes that the offering demonstrates that HKSAR’s legal and regulatory environment is flexible and conducive to innovative forms of bond issuances.
“Hong Kong has been proactively promoting the application of innovative technologies in the financial field, and is actively exploring new concepts and technologies to enhance the efficiency, transparency and security of financial transactions,” says financial secretary Paul Chan.
“The successful issuance of this tokenized green bond marks an important milestone as it demonstrates Hong Kong’s strengths in combining bond market, green and sustainable finance as well as fintech. The HKSAR government will continue to promote the innovative development of the financial market,” Chan adds.
Christopher Hui, the secretary for financial services and the treasury, notes that the government will continue to provide a facilitating environment to promote sustainable and responsible development of the virtual assets sector.
HSBC was the market practice adviser, and also the custodian along with Bank of China (Hong Kong). HSBC acted as the trustee, CMU lodging and paying agent, registrar, transfer agent, and issuer agent on platform. Crédit Agricole CIB and HSBC were the joint green structuring banks.
Allen & Overy acted as legal adviser to the issuer, Ashurst to the platform provider, and Linklaters to the banks and trustee.
Vigeo Eiris provided a second-party opinion for the green bond framework. The tokenized green bond has also received the Green and Sustainable Finance Certificate (pre-issuance stage) from the Hong Kong Quality Assurance Agency.