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Hong Kong’s first Retail Green Bond sells out with US$4.2 billion in orders, auguring well for city’s role as funding hub for climate-friendly projects
- The three-year note, offering a 2.5 per cent return on a minimum investment of HK$10,000, was 1.2 times oversubscribed
- Strong response boosted by volatile stock market as investors seek a safer bet, says Bright Smart Securities boss
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Hong Kong government’s inaugural Retail Green Bond has been oversubscribed 1.2 times by small investors, underlining the city’s potential as a fundraising hub for environmentally friendly projects.
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The three-year note, which offers a 2.5 per cent return on a minimum investment of HK$10,000 (US$1,274), attracted HK$32.88 billion (US$4.2 billion) from 493,000 people, a government spokesman said on Friday.
Subscriptions were on sale from April 26 until 2pm on Friday, and proved a hit with investors, according to banks and brokers.
Because of the strong response, the size of the initial tranche will increase from HK$15 billion to HK$20 billion. The allotment will be announced on May 16 before the bond is listed on the stock exchange three days later.
Green bonds are fixed-income financial products designed to fund environmentally friendly projects. The offering forms an important part of Hong Kong’s plan to increase the use of wind and solar power and waste-to-energy projects to generate electricity as it strives to achieve carbon neutrality by 2050.
“The strong response to the green bonds is due to the volatile stock market in recent months, which has led investors to opt for fixed income products with lower risk,” said Edmond Hui Yik-bun, chief executive of Bright Smart Securities, one of the largest local brokerages.
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