HK Breaks New Ground With Digital Green Bond Issuance

This is the first multi-currency digital bond offering in the world, and the first digitally native bond issuance in Hong Kong.

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This is the first multi-currency digital bond offering in the world, and the first digitally native bond issuance in Hong Kong. Hong Kong's government has announced the successful offering of around HKD 6 billion (USD 767 million) worth of digital green bonds. This is the second digital green bond issuance following the government's inaugural tokenised green bond issued in February 2023. The new two-year digital green bonds are denominated in HKD, RMB, USD and EUR, making this the first multi-currency digital bond offering in the world, and the first digitally native bond issuance in Hong Kong. The clearing and settlement system of the digital green bonds is the CMU, with HSBC Orion as the digital assets platform. (The February issuance used Goldman’s GS DAP tokenisation platform.) The issuance drew from the Hong Kong Monetary Authority's (HKMA) work with the BIS Innovation Hub on Project Genesis in 2021 to concept-test the issuance of tokenised green bonds. The HKMA said the new issuance, building on Project Genesis, "achieved new breakthroughs" in the several areas:
  • Broadening investor participation via existing market infrastructure: Facilitated by the CMU's external linkages, international investors have the option to access the digital green bonds via their accounts with Euroclear or Clearstream, thereby broadening the bond's investor base, enhancing its liquidity, and facilitating interoperability across different digital assets platforms and CSDs.
  • Streamlining issuance process: The bonds are issued in digitally native format, without the need to first issue in traditional CSDs and subsequently convert the bond into digital format.
  • Building in standardisation elements: The issuance is the first green bond to adopt ICMA's Bond Data Taxonomy, a standardised and machine-readable language that was developed to promote market efficiency and cross-system interoperability. [see ICMA statement]
  • Integrating green bond disclosures with digital assets platform: Key green bond documentation including the issuer's Green Bond Framework and relevant third-party review reports can be viewed on the digital asset platform HSBC Orion, enhancing transparency and accessibility of information.
"This second digital issuance includes multiple innovations that broaden investor access, support interoperability, and improve transparency and efficiency," said HKMA chief Eddie Yue. "We hope this issuance would promote the development of the digital securities market and encourage the wider adoption of digitalisation technology." The digital green bonds will be listed on the Hong Kong Stock Exchange around the end of the month. -- To find out more about digital assets and tokenisation, join us at Digital Assets Asia 2024, being held in Hong Kong on 27 March 2024. More information here.
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