Feb, 13, 2023, /South China Morning Post/ - The Hong Kong government has asked banks to arrange a debut offering of digital green bonds as the city pushes further into the fields of sustainable financing and virtual assets, according to a Bloomberg report.
The city hopes to raise HK$800 million (US$102 million) and has asked the Bank of China, Credit Agricole, Goldman Sachs and HSBC Holdings to hold investors calls on Monday, according to the report, which cited people familiar with the matter who asked not to be identified as they are not authorised to speak.
The interest earned on the tokenised notes will be recorded on a distributed ledger-based digital platform provided by Goldman Sachs, according to the sources.
Digital bonds are a relatively new concept. Singaporean bank DBS was the first in Asia to automate bonds, while the European Investment Bank is also among notable lenders to have offered them.
Joseph Chan, Hong Kong’s under secretary for financial services and the Treasury, said in a statement on February 8 that the tokenised green bonds would be a “pilot issuance to test out the compatibility of Hong Kong’s existing legal and regulatory framework, financial infrastructure, market operational practice.”
He said the offering is relatively small and that the Hong Kong Monetary Authority will provide guidance for future issuers to scale up.
It will be launched under the Government Green Bond Programme, according to Chan.
Hong Kong’s government issued US$5.75 billion in green bonds last month, denominated in US dollars, euro and renminbi. The government’s green bond programme is the largest of its kind in Asia.
Fitch Ratings, the American credit rating agency, assigned Hong Kong’s tokenised green bonds an F1+ rating on Sunday. That indicates the strongest capacity for timely payment of short-term financial commitments, and the lowest default risk relative to others in the same country or denomination.
The HKMA, the de facto central bank, has recently announced several policies aimed at boosting the city’s goal of becoming Asia’s digital assets capital, including the introduction of a mandatory stablecoin licensing regime before 2024.
