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

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The notes, with a tenor of three years, will make an interest payment every six months and guarantee a minimum payment of 4.75 per cent, higher than last year’s 2.5 per cent

Locking in guaranteed returns at a time when many time deposit interest rates are falling ‘is attractive to retail investors’, BOC (HK) executive says

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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 as the Kai Tak Sports Park. Photo: Dickson Lee

Mia Castagnone

Published: 8:31pm, 18 Sep 2023Updated: 10:58am, 19 Sep 2023

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.