Green Bonds: Hong Kong Makes Its Mark

Environmentally-friendly investment takes another step forward.

Hong Kong made explicit its intent to make its mark on the region’s green-finance market by mandating a US dollar bond under Rule 144A, meaning the bonds will only be offered to qualified US institutional investors. Financial authorities intend the bond, to be issued off the territory’s green medium-term note program—at $12.7 billion, the world’s largest sovereign green bond program—to pave the way for the territory to become a major host of green bond issuance.

A $500 million transaction at three-and five-year tenors was mandated to HSBC and Credit Agricole. On May 7, the Hong Kong SAR became the first Asian signatory to the Green Bond Pledge, with plans to reduce HK’s carbon intensity from as high as 70%.

The announcement came at the end of a week when the Monetary Authority (HKMA) released measures aimed at boosting the territory’s regulatory and logistical framework for green financing. This includes a methodology for “assess[ing] the Greenness Baseline of individual banks,” according to HKMA, and the provision of technical support for these, now officially given preferential treatment from the Hong Kong authorities as managers of the Hong Kong Exchange Fund. Potential green bond issuers waiting in the wings include Hong Kong’s banks and financial corporations.