The government of the Hong Kong Special Administrative Region on June 3 successfully priced a multi-currency green and infrastructure bonds amounting to HK$27 billion ( US$3.44 billion ) equivalent under its sustainable and infrastructure bond programmes.

The deal was executed following a virtual roadshow on June 2. It included an infrastructure bond amounting to HK$1.5 billion for 30 years, which was priced at par with a similar coupon and re-offer yield of 3.85%. This was in line with the final price guidance and 40 basis points ( bp ) tighter than the initial marketing range of 4.25% area.

This was the first time the 30-year Hong Kong dollar bond was offered by the government, and it is the longest tenor Hong Kong dollar bond issued by the government so far. This helped extend the Hong Kong dollar benchmark yield curve, further promoting the development of the local bond market.

The offering also consisted of a dual-tranche green yuan-denominated bond with the 20- and 30-year tenors both amounting to 4 billion yuan ( US$555.55 million ). The 20-year tranche was priced at par with a similar coupon and re-offer yield of 2.60%, or 50bp inside the initial price guidance of in the 3.10% area. The 30-year tranche was also priced at par with a similar coupon and re-offer yield of 2.70%, which was likewise 50bp back of the initial price range in the 3.20% area. The 20- and 30-year yuan bonds, which were first introduced in 2024, also received strong support, doubling in issuance sizes from a year ago.

The green US dollar bond issued amounted to US$1 billion for five years and was priced at 99.884% with a coupon of 4.125%. This represented a spread of 12bp over the US treasuries, or 38bp tighter than the initial price guidance in the 50bp area.

The green euro component of the deal amounted to €1 billion ( US$1.14 billion ) with a tenor of eight years and carried a coupon of 3.125%. This is equivalent to a spread of 75bp over mid-swap, which was 25bp inside of the initial price guidance in the 100bp area.

The Hong Kond dollar, renminbi and euro bonds were offered in Reg S only format, while the US dollar bond was offered in Reg S/144A format.

The issuance of the green bonds, says Hong Kong financial secretary Paul Chan, is aimed at attracting and channelling market capital to support green projects and promoting the sustainable development in Hong Kong. “The issuance of infrastructure bonds,” he adds, “helps to accelerate the development of projects, such as the Northern Metropolis, and facilitate the early completion of projects for the good of the economy and people’s livelihood.”

The offering attracted the participation from a wide spectrum of investors from more than 30 markets across Asia, Europe, the Middle East and the Americas, with a total order amounting to about HK$237 billion equivalent, representing a subscription ratio of around 3.3 to 12.5 times.

The overwhelming response to the deal across all currencies, notes Eugene Ng, managing director and head of debt capital markets for Greater China at HSBC, and one of the deal arrangers, demonstrates Hong Kong’s robust credit fundamentals and its ability to attract strong demand for high-quality government bonds “The positive market response,” he adds, “will also enhance liquidity in the long end of the Hong Kong dollar and the CNH [offshore yuan] curves.”

Crédit Agricole CIB, Bank of China ( Hong Kong ), BNP Paribas and Standard Chartered were the joint green and sustainable bond structuring banks for the transaction, while HSBC, J.P. Morgan and Citi acted as the joint infrastructure bond structuring advisers.