The government of the Hong Kong Special Administrative Region of China (HKSAR) confirmed the successful offering of USD 2.5 billion of green bonds under the Government Green Bond Program. HKMA acts as the representative of HKSAR government for the green bond offerings under the Government Green Bond Program. The offering comprises three tranches of USD 1 billion 5-year, USD 1 billion 10-year and USD 500 million 30-year green bonds, which will build a comprehensive benchmark curve for potential issuers in Hong Kong and the region. The green bonds are expected to be listed on the Hong Kong Stock Exchange and the London Stock Exchange.
The 30-year tranche is also the first 30-year green bond to be issued by an Asian government and the longest tenor to be issued by the HKSAR government. Overall, the deal attracted strong interest from a diverse group of conventional and green investors. There was overwhelming demand from Asian institutional investors, resulting in the overall allocation of 65% of the total issuance size to this group. This reflects the strong pickup in Asian investors’ appetite for green financial products and demonstrates Hong Kong’s leading role in championing green finance in the region. European and U.S. investors received an allocation of 20% and 15% of the total issuance, respectively. Worth noting is the strong preference of European and U.S. investors for longer-tenor green bonds, with a combined allocation of half of the 30-year tranche. By investor type, 34% of the green bonds were distributed to banks; 46% to fund managers, private banks, and insurance companies; and 20% to central banks, sovereign wealth funds, and supranationals.
The HKSAR government had published the green bond framework in 2019, which sets out how green bond proceeds will be used to fund projects that will improve the environment and facilitate the transition to a low-carbon economy. The green bonds have also received the Green Finance Certificate (Pre-issuance Stage) from the Hong Kong Quality Assurance Agency. Credit Agricole CIB and HSBC acted as Joint Global Coordinators, Joint Lead Managers, Joint Bookrunners, and Joint Green Structuring Banks for the Green Bonds offering while BNP PARIBAS, Citigroup, ICBC (Asia), J.P. Morgan, and Standard Chartered Bank acted as Joint Bookrunners and Joint Lead Managers.
Keywords: Asia Pacific, Hong Kong, Banking, Green Bonds, ESG, Sustainable Finance, HKMA
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.