Hong Kong’s latest retail green bond offering receives ‘positive’ response in low interest rate environment

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Hong Kong’s latest offering of retail green bonds logged a strong response when it opened for subscriptions on Monday, banks managing the issue said.
The about HK$15 billion (US$1.9 billion) notes, with a tenor of three years, will make an interest payment every six months based on the average rate of the consumer price index over that half-year period. The bonds guarantee a minimum payment of 4.75 per cent – an increase from last year’s batch that yielded 2.5 per cent.

The notes’ minimum investment amount is HK$10,000, and Hong Kong residents are able to subscribe to as much as HK$500,000 worth through securities brokers, banks and the Hong Kong Securities Clearing Company. The subscription period will run until 2pm local time on September 28, and the bonds will be issued on October 10 before listing on the Hong Kong stock exchange the next day.

“The yield of the new batch of retail green bonds is attractive,” Citibank spokesperson said. “The first-day subscription response is positive, with the subscription number meeting our expectations.”

Green bonds are fixed-income financial products designed to fund projects that are environmentally friendly. The new notes, as well as other financing instruments launched under the government’s green bond programme, aim to enhance the government’s sustainable investment offerings and promote green finance.
The bonds aim to offer Hongkongers “community investment options with steady returns”, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said earlier this month.

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“The first-day subscription response for the second batch of green retail bonds was satisfactory at Bank of China (Hong Kong) [BOC(HK)], with subscribers applying for 10 lots on average, which was more than seven lots in previous years,” said Joyce Leung Mei-yee, an assistant general manager at the lender.

The applications have been made mainly through the bank’s electronic channels. With many time deposit interest rates in Hong Kong having dropped recently, “subscribing for green retail bonds to lock in a guaranteed return of 4.75 per cent in three years is attractive to retail investors”, Leung added.

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HSBC, the biggest of Hong Kong’s three currency-issuing banks, said the latest batch of green bonds had received a “higher [than] average subscription amount by HSBC customers on the first day, compared to … 2022.”

HSBC and BOC (HK) have been appointed co-arrangers for the retail issuance by the government. The size of the tranche might increase to a maximum of HK$20 billion, subject to market conditions, according to the Hong Kong Monetary Authority.

China Citic Bank said it had received about the same number of subscription applications on the first day of launch as last year, but the total subscription amount had increased by nearly 30 per cent from the previous batch.

Proceeds from the 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.


Such green projects include the district cooling system for Tung Chung New Town extension, the Kai Tak Sports Park and the replacement of the storm-detecting weather radar at Tai Mo Shan, according to the government’s website.


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