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Finance

Hong Kong touts ESG credentials with world's biggest retail green bond

$2.5bn offering is city's latest building block in hub for sustainable finance

Hong Kong has sought to attract investment focused on environmental, social and governance factors.   © Reuters

HONG KONG -- Hong Kong's first green bond for individual investors begins trading here Thursday after a 20 billion Hong Kong dollar ($2.55 billion) offering that the city calls the biggest of its kind anywhere.

The three-year bond carries twice-yearly interest payments tied to inflation, with a guaranteed minimum annual rate of 2.5%. The funds raised will go toward resource-recycling projects and the construction of environmentally friendly buildings.

The Hong Kong government has sought to attract investors focused on environmental, social and governance factors. It has issued more than $9.5 billion in green bonds since 2018, with plans for more.

"This is the largest retail green bond issuance across the globe thus far," Financial Secretary Paul Chan said in a news release Monday.

"It has also broadened the variety of green and sustainable financial products in Hong Kong, reinforcing our position as a premier green finance hub both regionally and internationally," he said.

Hong Kong Finance Secretary Paul Chan announces plans for the city's inaugural retail green bond in February.

Hong Kong had planned to raise HK$15 billion in the retail bond offering. The issue was expanded in response to strong demand from retail investors, thanks in part to its relatively low minimum investment of HK$10,000. The bond ended up attracting HK$32.5 billion in demand from more than 488,000 people.

In 2021, Hong Kong issued a 30-year green government bond in dollars and a 20-year bond in euros -- each a first in Asia -- in an effort to set benchmarks in the global green finance market.

The city is starting to attract a broader range of issuers. The mainland city of Shenzhen issued offshore yuan-denominated green debt here in 2021.

"By leveraging our advantages as an international financial center, we can facilitate matching between international capital and quality green projects," Chan said in his budget speech this February.

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