The Hong Kong government has launched a benchmark-sized, four-year euro-denominated green bond in digital format, according to a term sheet reviewed by Reuters on Monday. The bond carries initial pricing guidance of 11 basis points above mid-swaps and is scheduled to settle on Tuesday. The final issue size and coupon remain to be determined, with the bond featuring a fixed coupon paid twice annually. Recent market data shows the bond is priced at 3.8% for the HK$ 2-year tenor, 3.0% for the US$ 3-year tenor, 1.65% for the CNH 5-year tenor, with the euro 4-year tenor maintaining the 11 basis points above mid-swaps pricing guidance.
The government plans to list the bond on the Hong Kong Stock Exchange with proceeds designated to finance or refinance eligible environmental projects under Hong Kong's Green Bond Framework. As reported by Reuters, this initiative represents another step in Hong Kong's efforts to expand the use of digital infrastructure in capital markets. The digital format enables the government to raise funds for projects that meet its environmental financing criteria while integrating with existing financial-market infrastructure.
The bonds will be recorded electronically rather than issued as paper certificates, with HSBC's Orion digital platform being used for issuance, according to the term sheet reviewed by Reuters. Settlement and clearing will take place through the Hong Kong Monetary Authority's Central Moneymarkets Unit, which is linked to international securities depositories Euroclear and Clearstream. This digital infrastructure approach streamlines the issuance process while maintaining compliance with international standards.
Hong Kong maintains sovereign ratings of Aa3 from Moody's, AA+ from S&P, and AA- from Fitch, as reported by Reuters. The transaction comes as governments and financial institutions increasingly explore digital bond issuance, including the use of electronic platforms and distributed-ledger technology, to streamline issuance and settlement in capital markets. This initiative signifies an increasing shift towards digital bond issuance in the financial sector.
