Hong Kong prices world’s first government bonds with tokenised settlement The Hong Kong government priced a record HK$10 billion (US$1.3 billion) tokenised green bond offering on Monday, completing the world’s first government issuance to allow settlement using digital-fiat currencies as the city pushes to burnish its standing as a global hub for digital assets. “Hong Kong is uniquely positioned to connect traditional finance to the digital asset era,” said Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, in an announcement published by the Hong Kong Monetary Authority (HKMA) on Tuesday. “Riding on our established strengths in financial services, this issuance will further consolidate Hong Kong’s status as a leading green and sustainable finance hub.” The issuance comprises four tranches across multiple currencies, marking the world’s largest digital bond offering to date, according to the announcement. The Hong Kong dollar and yuan tranches can be settled using e-HKD and e-CNY – digital versions of the fiat currencies built on blockchain technology – alongside traditional settlement methods. “This marks the first digital bond offering in the world that integrates tokenised central bank money in the form of e-CNY and e-HKD in the settlement process” to “further reduce settlement time, costs and counterparty credit risk”, the HKMA said. Investors buying the HK$2.5 billion, two-year tranche will receive 2.5 per cent interest annually for two years. The 2.5 billion yuan (US$351 million), five-year tranche pays 1.9 per cent annually, the US$300 million, three-year tranche yields 3.633 per cent and the 300 million euro (US$348 million), four-year tranche pays 2.512 per cent. The offering attracted total demand of more than HK$130 billion, with subscriptions coming from a wide range of global institutional investors including asset managers, banks, insurance companies and private banks, the announcement said. The government’s third issuance of digital green bonds attracted “overwhelming subscription” that reflected “market support for tokenised products”, said Financial Secretary Paul Chan Mo-po. “The government will regularise the issuance of tokenised bonds, support the establishment of comprehensive benchmarks, and promote innovative products and services for a wider application of digital finance,” he added. The HKMA had sought to explore new innovations and “reinforce the vision” for Hong Kong as a global hub for digital assets, said Eddie Yue Wai-man, chief executive of the HKMA. “The integration of tokenised central bank money in this issuance lays the foundation for future integration with other forms of digital money, fostering interoperability and unlocking new synergies across different digital infrastructures,” he said. Proceeds from the bond offering will finance and refinance projects under the government’s Green Bond Framework. Previously, the Hong Kong government issued two batches of tokenised green bonds, a HK$800 million batch in February 2023 and another worth around HK$6 billion in February 2024. The latest issuance extends the tenor to up to five years, addressing investor demand for longer-term digital bonds. Compared with the previous issuances, the number of investors also “expanded markedly”, the HKMA said. The digital green bonds will clear and settle through the Central Moneymarkets Unit operated by the HKMA. HSBC’s Orion serves as the digital assets platform. “Hong Kong has been in the forefront of financial innovation,” said David Liao, co-CEO of Asia and Middle East at HSBC. “This latest digital issuance on HSBC Orion saw world-record size and increased participation from institutional investors across various markets, further showcasing the potential of distributed-ledger technology to enhance scalability in the bond market.” HSBC, Bank of China (Hong Kong), Bank of Communications, BNP Paribas, Credit Agricole CIB, ICBC (Asia), and JPMorgan were the joint global coordinators for the offering. Settlement can be completed just one business day after the trade date. The bond pricing followed a virtual roadshow from November 3 to 7. https://www.scmp.com/business/banking-finance/article/3332391/hong-kong-prices-worlds-first-government-bonds-tokenised-settlement (ICE HONG KONG)

Fonte notizia: South China Morning Post