The Government of the Hong Kong Special Administrative Region (HKSAR Government) announced today (16) that it has successfully issued HK$800 million tokenized green bonds under the Government Green Bond Program (Green Bond Programme). This is the world’s first tokenized green bond issued by a government.
According to the press release, the 1-year Hong Kong dollar tokenized green bond held an online roadshow earlier this week and was priced yesterday with a yield of 4.05%. The offering was underwritten by four banks, two of which also acted as investor custodians. The Hong Kong Monetary Authority (HKMA) Central Unit for Debt Instruments (CMU) is the settlement and settlement system for this bond, and the platform is Goldman Sachs’ tokenization platform GS DAP TM .
This secondary issuance is used on a private blockchain network to settle security tokens 3 representing beneficial interests in bonds and cash tokens representing claims on HKMA’s Hong Kong dollar legal tender in a T+1 DvP manner. Subsequent bond processes (including coupon payment, secondary market transaction settlement and maturity redemption) will also be carried out digitally on the private blockchain network.
The tokenized green bond is cleared and settled through CMU, and the transaction through CMU benefits from the legal finality of settlement under Hong Kong law. The records on the private blockchain network (on-chain records) are legally clear and final records that prove the ownership of security tokens and cash tokens by all parties on the platform.
As the first batch of tokenized bonds governed by Hong Kong law, this issuance demonstrates that Hong Kong can provide a flexible and convenient legal and regulatory environment for innovative bond issuance forms. As the representative of the Hong Kong Special Administrative Region Government under the green bond program, the HKMA will release a white paper in due course, summarizing the experience of this issuance, and looking forward to the next step, providing reference for the issuance of tokenized bonds in Hong Kong.
The Financial Secretary, Paul Chan, said: “Hong Kong has been actively promoting the application of innovative technologies in the financial sector, actively exploring new concepts and technologies to improve the efficiency, transparency and security of financial transactions. We published in October last year about virtual assets in Hong Kong The policy declaration of development shows that we actively embrace financial innovation related to the third generation Internet (Web3) and promote the prudent development of the market. The successful issuance of tokenized green bonds this time marks that Hong Kong is combining the bond market, green and sustainable finance, As well as the advantages of financial technology, it is a milestone. The SAR government will continue to promote the innovative development of the financial market.”
Secretary for Financial Services and the Treasury Mr Hui Chengyu said: “Green bond tokenization is one of the pilot projects announced by the government in the policy declaration on the development of virtual assets in Hong Kong. With a clear policy stance and roadmap, the government will strive to facilitate environment for the sustainable and responsible development of the virtual asset industry. We welcome market participants to launch tokenized offerings in Hong Kong.”
Yu Weiwen, Chief Executive of the HKMA, said: “Distributed ledger technology (DLT) is very promising and can bring innovation to the operation of financial markets. The HKMA and the Hong Kong Center under the Bank for International Settlements Innovation Hub will complete Project Genesis in 2021. Monetized green bonds go a step further on the basis of this project, using the cash tokens issued by the HKMA to realize on-chain DvP settlement, which promotes the application of DLT and brings us closer to the full use of DLT in The potential of the bond market. The HKMA and the government will use the experience of this issuance to cooperate with other stakeholders to launch more tokenized issuances, striving to break through the boundaries and encourage the application of technology.”
Sun Yu, Vice Chairman and President of Bank of China (Hong Kong), said: “Bank of China (Hong Kong) is honored to be the joint global coordinator, joint lead bank, joint bookrunner and custodian bank for the Hong Kong SAR government’s first tokenized green bond issuance , which just reflects the Bank’s commitment to promoting green and sustainable financial development in Hong Kong through innovative technology, as well as our long-term support for the HKMA’s green bond development initiative. The bond issue has received high attention from institutional investors, which fully proves that Hong Kong The market is diverse and innovative. We believe that with the evolution and application of virtual assets in green bond schemes, it will help consolidate Hong Kong’s leading position as a green and sustainable financial center in the Asia-Pacific region.”
Edouard O’Neill, Chief Executive Officer and Head of Asia Structured Finance, CA-CIB Hong Kong, said: “CA-CIB is delighted to have the opportunity to partner with the HKMA to issue the first tokenized green bond for the Hong Kong SAR Government. This major breakthrough in innovation in Hong Kong’s capital market has laid a solid foundation for the digitization of assets for other market players in the region. We are honored to assist the ongoing initiatives to promote green finance in the city and promote fintech development.”
Max Minton, Head of Digital Assets Asia Pacific at Goldman Sachs, said: “This offering is a testament to the HKMA’s leadership and innovation in green finance, and marks another important milestone in the digitization of capital markets. This meaningful offering leverages Goldman Sachs’ tokenization platform, GS DAP™, we are excited to play a leading role in contributing to the efficiency and digitization of debt issuance.”
Lam Wai Hung, Chief Executive Officer of HSBC Hong Kong, said: “HSBC has always supported the Hong Kong Special Administrative Region Government’s green bond program. We are very honored to be part of the government’s first tokenized green bond issuance. Tokenized green bonds not only symbolize the capital market’s This milestone in innovation also demonstrates the potential to fully digitize the bond issuance and asset servicing processes. We look forward to continuing to work closely with the Hong Kong Monetary Authority and industry partners to strengthen Hong Kong’s position as a regional hub for green finance and fintech.”
Ma Ruijie, Managing Director of Fidelity International Asia Pacific (excluding Japan), said: “We are delighted to represent our clients in this innovative offering. This is an important step in Hong Kong’s digital asset market practice. We believe that distributed ledger technology has great potential to promote The transformation of the financial market has made it easier for investors to participate, bringing more diversified investment options with lower transaction costs through tokenization.”
This tokenized green bond was issued under the Hong Kong SAR Government’s Green Bond Framework (the Framework). Vigeo Eiris has provided independent advice on the framework, and this tokenized green bond has also been certified by the Hong Kong Quality Assurance Agency for the pre-issuance stage of the “Green and Sustainable Finance Certification Scheme”.