Hong Kong launches inaugural green bond

Hong Kong has announced the successful issuance of a $1bn inaugural green bond under its Government Green Bond Programme.

The transaction which sets a new benchmark for potential issuers in Hong Kong and the region, and despite the recent financial market volatility sparked by fears of a trade war, the bond attracted orders exceeding $4bn - four times the issuance size allowing the final pricing to be tightened by 17.5 basis points from the initial price guidance.

Orders were received from over 100 global institutional investors, and half of the bond was distributed to Asia, 27 per cent to Europe and 23 per cent to the US. By investor type, 29 per cent was distributed to banks, 30 per cent to fund managers, private banks and insurance companies, and 41 per cent to sovereign wealth funds, central banks and supranational.

“The favourable response from global investors indicates not only their recognition of Hong Kong’s credit strength but also their support of Hong Kong’s determination and efforts in promoting sustainable development and combatting climate change,” the financial secretary of Hong Kong, Mr Paul Chan, said.

The success is a boost to Hong Kong’s attempts to identify itself as a regional hub for green investment, and bond is expected to be listed on the Hong Kong Stock Exchange and the London Stock Exchange. The bond has been assigned credit ratings of AA+ by S&P Global Ratings and AA+ by Fitch.

The green bond proceeds will be used to fund projects in the environment and facilitate the transition to a low carbon economy.

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