This undated photo shows top-grade commercial skyscrapers in Hong Kong's Central district. (PHOTO PROVIDED TO CHINA DAILY)
The finance sector has welcomed the Hong Kong Special Administrative Region government’s first global issuance of tokenized green bonds, saying the move would solidify Hong Kong’s position as a regional green finance and financial technology hub.
The government of the Hong Kong Special Administrative Region on Thursday announced it has issued HK$800 million ($102 million) worth of tokenized green bonds under the government’s green bond program.
The bonds, which were priced at 4.05 percent with a one-year tenor, were distributed by four banks and cleared and settled through the Hong Kong Monetary Authority's Central Moneymarkets Unit under Hong Kong law. The use of proceeds will be directed at financing green projects set out in the government’s green bond framework.
Processes in the bond’s lifecycle — including beneficial interest records, coupon payments, settlements of secondary trading, and maturity redemption — will be digitalized and performed on Goldman Sachs’ tokenization platform, GS DAP
Processes in the bond’s lifecycle — including beneficial interest records, coupon payments, settlements of secondary trading, and maturity redemption — will be digitalized and performed on Goldman Sachs’ tokenization platform, GS DAP.
“The issuance is conducive for Hong Kong to take up a leading position for fostering development in sustainable finance and (as a) virtual asset management hub,” CPA Australia Greater China 2023 Divisional President Robert Lui told China Daily.
Lui, who is also the Hong Kong digital asset leader at Deloitte China, added that “the experience from this issuance will lay a solid foundation for Hong Kong to build up platforms, to make breakthroughs and to improve relevant regulation.”
“This deal marks a significant step towards capital markets innovation, and showcases the transformative potential of tokenization in the bond issuance and asset servicing process,” said Luanne Lim, chief executive officer at HSBC Hong Kong.
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Besides HSBC, Bank of China (Hong Kong), Crédit Agricole Corporate and Investment Bank, and Goldman Sachs are the joint global coordinators, joint lead managers and joint bookrunners for this issuance.
“We regularly advise on first-to-market digital assets and ESG-themed debt capital markets transactions. We thank our clients for the trust they continue to place in us, and our cross-jurisdictional team is delighted to have participated in this landmark transaction,” said Gloria Cheung, capital markets partner at Linklaters, the legal advisor to banks and trustees for this issuance.
Vice-Chairman and Chief Executive of Bank of China (Hong Kong) Sun Yu added: “This issuance has drawn strong interest from institutional investors and serves as a testament to the diversity and innovativeness of Hong Kong’s financial market.”
Edouard O’Neill, Hong Kong branch chief executive officer and Asia head of structured finance at Crédit Agricole CIB, noted that “this issuance marks a significant breakthrough in the capital market innovation for Hong Kong and lays a solid foundation for asset digitization for the other market participants in the region.”
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Financial Secretary Paul Chan Mo-po said in a press statement on Thursday: “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.”
HKMA, the representative for the SAR government’s green bond program, will issue a white paper in due course to summarize the experience gained from this issuance, set out the next steps and provide a blueprint for issuing tokenized bonds in Hong Kong.