Hong Kong's First Digital Green Bond Sale

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by KnowESG
KnowESG_Hong Kong
Image of the city of Hong Kong.

Hong Kong's government has hired banks to help with its first sale of digital green bonds. This expands the use of a new technology that makes resolution and payment faster.

The special administrative region is aiming to generate HK$102 million through the issuance of tokenised green notes and has selected Bank of China, Crédit Agricole, Goldman Sachs, and HSBC to conduct investor presentations starting Monday, according to anonymous sources who are privy to the information.

According to the sources, the digital assets platform based on distributed ledger technology provided by Goldman Sachs will keep a record of the beneficial interests in the notes.

Digital bonds are still new, and DBS Group Holdings of Singapore and the European Investment Bank were among the first companies to use them. By going around clearing systems, the blockchain-powered platform for these bonds speeds up the settlement, and coupon payments are also done more quickly.

In a recent statement, Hong Kong's acting secretary for financial services and the treasury, Joseph Chan, said that the proposed tokenised green bond issuance will be used as a test to see how well tokenised bonds work with the city's current legal and regulatory framework, financial infrastructure, and market operational procedures. He also said that tokenising bonds could make issuing and settling bonds more efficient and lower their costs.

Hong Kong is working towards becoming Asia's digital asset capital and plans to enforce a licensing programme for cryptocurrency platforms in March, which will allow for retail trading.

This planned sale of notes is part of Hong Kong's ongoing effort to establish itself as a hub for sustainable financing. Last month, the city completed its largest ever green transaction, issuing green bonds worth $5.8 billion denominated in three currencies.

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Source: Bloomberg

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