Hong Kong’s Government Successfully Issued $100 Million In Tokenized Green Bonds

Key Points:

• The Hong Kong government successfully released its first 800 million Hong Kong dollar tokenized green bond.
• The Hong Kong Special Administrative Region of the People’s Republic of China sold the bond as part of its green bond program.
• Together with three banks, the Tokenized Green Bonds were created.

According to a statement released on Thursday, the Hong Kong government successfully issued its first 800 million Hong Kong dollar tokenized green bond under the Government Green Bond Programme (GGBP).

According to the Hong Kong Monetary Authority’s (HKMA) statement, the bond was sold by the government of the People’s Republic of China’s Hong Kong Special Administrative Region (HKSAR). It is the first green bond ever issued by a government worldwide.

Yesterday, the price for the one-year Tokenized Green Bond in Hong Kong Dollars was set at 4.05%. A syndicate of four banks, including two that serve as investor custodians, disbursed it. The clearing and settlement system for the bond is the Central Moneymarkets Unit (CMU) of the HKMA, which uses the GS DAPTM tokenization technology from Goldman Sachs.

On a T+1 basis, the main issue was settled through a private blockchain network using a delivery-versus-payment (DvP) mechanism between securities tokens3 representing beneficial interests in the bond and cash tokens representing a claim for HKD currency against the HKMA. Bond lifecycle processes, such as coupon payment, secondary trade settlement, and maturity redemption, will also be digitalized and carried out on a private blockchain network.

Paul Chan, the Financial Secretary, said in a statement:

“Our Policy Statement on Development of Virtual Assets in Hong Kong issued in October last year sets out that we actively embrace financial innovations related to Web3 and promote steady and prudent market development. The successful issuance of this tokenised green bond marks an important milestone as it demonstrates Hong Kong’s strengths in combining bond market, green and sustainable finance as well as fintech. The HKSAR Government will continue to promote the innovative development of the financial market.”

Since at least 2021, the HKMA has been researching the issuing of tokenized green bonds. Green bonds are issued to finance environmentally beneficial initiatives, and tokenization makes it simple and convenient to sell them digitally.

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Harold

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