Hong Kong prices world’s first tokenised green bond offering

Part of move to develop into a virtual assets hub

The Hong Kong government has become the first government globally to issue a tokenised green bond offering.

The HK$800m ($102.1m) one-year bond was priced at a coupon rate of 4.05% following a virtual roadshow through joint global coordinators, lead managers and bookrunners Bank of China (Hong Kong), Credit Agricole, Goldman Sachs and HSBC.

The beneficial interests in the notes were recorded on a blockchain platform developed by Goldman Sachs.

The primary issuance was settled on a delivery-versus-payment basis between securities tokens representing beneficial interests in the bonds and cash tokens representing a claim for Hong Kong dollar fiat against the Hong Kong Monetary Authority on a T+1 basis across a private blockchain network.

Proceeds of the bond lifecycle including coupon repayment, settlement of secondary trading and maturity redemption will also be digitalised and performed on the private blockchain network.

HSBC was the market practice adviser as well as the custodian along with Bank of China (Hong Kong). HSBC also acted as the trustee, CMU lodging and paying agent, registrar, transfer agent and issuer agent on platform, while Credit Agricole and HSBC acted as the joint green structuring banks.

“The successful issuance of this tokenised 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. The HKSAR government will continue to promote the innovative development of the financial market,” said financial secretary Paul Chan.

“Green bond tokenisation is one of the pilot projects announced in the government’s policy statement on development of virtual assets in Hong Kong. Through a clear policy stance and roadmap, the government will work towards providing a facilitating environment to promote sustainable and responsible development of the virtual assets sector. We welcome market participants to conduct tokenised issuances in Hong Kong,” said Christopher Hui, the secretary for financial services and the Treasury.

The Hong Kong government has been seeking lately to develop the former British colony into a virtual assets hub despite the recent blowback from the collapse of FTX. In October, the Securities and Futures Commission’s deputy chief executive and executive director of intermediaries, Julia Leung, said that the regulator was seeking to overturn the previous regulatory framework that restricted access to virtual assets to professional investors only.