24/11/21

HONG KONG: Jurisdiction prices first yuan-denominated green bonds.

As published on scmp.com, Wednesday 24 November, 2021.

Hong Kong has priced its first yuan-denominated green bonds, raising 5 billion yuan (US$783 million) just days after selling its first euro-denominated green offering as the city seeks to position itself as Asia’s hub for sustainable finance.

The city’s government sold 2.5 billion yuan in three-year green bonds and 2.5 billion in five-year green bonds in its fourth offering since announcing its sustainable bonds programme in 2018, according to a person familiar with the offering.

Financial Secretary Paul Chan Mo-po announced the latest round of green bonds on his blog on Sunday.

“Climate change is an imminent issue for all of us,” Chan said in the post. “The government and financial regulators are working with the industry to enhance the financial sector’s resilience to climate risks and to seize the relevant opportunities, so as to support Hong Kong meeting its pledge to achieve carbon neutrality before 2050. At the same time, we also leverage our role as the financial centre for the country and Asia to move towards green and sustainable development.”

The offering underscores the city’s HK$175.5 billion (US$22.5 billion) commitment to green bonds over the next five years as it strives to become an international green financial centre.

Green bonds are fixed-income financial products designed to fund projects that are environmentally friendly.

The yuan-denominated bonds are expected to be settled on November 30 and be listed on the Hong Kong and London stock exchanges.

Last week, the city raised US$3 billion through its third green bond sale, pricing some of the bonds in euros for the first time and offering the longest euro-denominated green bond ever issued by an Asian government.

The city raised US$1 billion in its first green bond offering in 2019 and US$2.5 billion when it priced a 30-year green bond in January.

Hong Kong plans to increase the use of wind, waste-to-energy and solar power to generate electricity in the coming years, part of the push to reach carbon neutrality by 2050, according to the special administrative region’s (SAR’s) latest climate action plan unveiled in October.

Proceeds from the green bond sale will go to the city’s Capital Works Reserve Fund to finance or refinance public works projects that provide environmental benefits and support the sustainable development of Hong Kong.

Credit Agricole, HSBC and Industrial and Commercial Bank of China (Asia) are acting as joint global co-coordinators on the offering.