Hong Kong hires banks for sale of green bonds to raise dollar, euro, offshore yuan funds
- Financial Secretary Paul Chan Mo-po said in his budget speech the government would raise HK$20 billion via green bonds and infrastructure bonds in 2024-2025
Hong Kong’s government unveiled plans for a multi-tranche sale of green bonds in dollar, euro and offshore yuan currencies and hired banks to organise investor meetings beginning on Tuesday.
The bonds, which are expected to be rated AA+ by S&P Global and AA- by Fitch Ratings, are to be issued under the government’s HK$500 billion (US$64 billion) global medium-term note programme.
Financial Secretary Paul Chan Mo-po announced in his budget speech in February that the government would issue HK$120 billion worth of bonds in the 2024-2025 financial year, including HK$20 billion worth of green bonds and infrastructure bonds.
In May, a resolution was passed to raise the borrowing ceiling to HK$500 billion for the government’s green bond programme, which was expanded to cover sustainable finance projects, as well as a new infrastructure bond programme to facilitate early completion of projects.
The Hong Kong Monetary Authority (HKMA) and the Financial Services Branch of Financial Services and the Treasury Bureau will act as issuers of the bonds as representatives of the government.
The offering will have varying tenors, with the offshore yuan-denominated tranche to comprising of bonds maturing in two, five and 10 years. A longer tenor bucket is also likely. The euro-denominated tranche will consist of a seven-year bond, and the US dollar-denominated part will contain a three-year bond. The bonds could be priced as early as Wednesday.
Credit Agricole, HSBC, Citigroup and JPMorgan are joint global coordinators, joint bookrunners and joint lead managers to the issue.
The proceeds will be used to finance or refinance eligible projects under the government’s green bond framework to “provide environmental benefits and support the sustainable development of Hong Kong”, according to the term sheet.
The nine eligible categories are renewable energy, energy efficiency and conservation, pollution prevention and control, waste management and resource recovery, water and waste water management, nature conservation and biodiversity, clean transport, green buildings and climate change adaptation.
