Hong Kong raises $1 bln in oversubscribed first green bond

by Reuters
Wednesday, 22 May 2019 09:58 GMT

FILE PHOTO: An evening view of the financial Central district in Hong Kong, China November 23, 2017. REUTERS/Bobby Yip

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"The favourable response from global investors indicates... their support of Hong Kong’s determination and efforts in promoting sustainable development and combating climate change"

  • Hong Kong sells first green bond under HK$100 bln scheme
  • Orders for bond exceed $4 billion
  • Green bond issuance expected to grow in Asia                                                                                                                                                                                                                                          

- Hong Kong raised $1 billion from the sale of its first green bond on Wednesday, as the former British colony looks to establish itself as a centre for green finance.

Hong Kong sold a five-year U.S. dollar-denominated green bond with a coupon of 2.5%, attracting over $4 billion in orders from investors globally, the Hong Kong Monetary Authority said.

The proceeds from green bonds get earmarked for investment in environmentally friendly projects.

Wednesday's bond is the first to be issued under Hong Kong's HK$100 billion ($12.74 billion) green bond programme to fund projects around clean transportation, air quality improvement and green buildings. It is one of the largest green bond schemes globally.

"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 combating climate change,” said Paul Chan, Financial Secretary of Hong Kong.

Green bonds account for a small portion of the global bond market but are expected to gain in size, particularly in Asia which has lagged other regions such as Europe.

Worldwide corporate green bond issuance is at $41.3 billion so far this year, Refinitiv data showed, while sovereigns have raised $17.8 billion.

Asia accounted for $12 billion of the corporate green bonds and $2.6 billion of the sovereign paper, the data showed.

Over 100 global institutional investors placed orders for Hong Kong's green bond, with 50% going to Asia, 27% to Europe and 23% to the United States, the HKMA said.

Sovereign wealth funds, supranationals and central banks took up the biggest share of the bond at 41%.

Indonesia was the first Asian country to sell a green bond in 2018, raising $1.25 billion. (Full Story)

Credit Agricole and HSBC were joint global coordinators for Hong Kong's green bond.

($1 = 7.8490 Hong Kong dollars)

(Editing by Shri Navaratnam)

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