China launches first green bond sale in Hong Kong, aiming to raise US$886 million
Country looking to issue offshore sovereign green bonds and tap global capital to invest in green development
China launched the sale of 6 billion yuan (US$886 million) of green sovereign bonds in Hong Kong late on Thursday night, the first such offering in the city, as Beijing doubles down on the efforts to boost its presence in offshore debt markets and seeks funding to support climate action amid the oil shock.
The sale drew a good response, indicating global investors’ confidence in the yuan assets, said HSBC Holdings, a joint lead manager and bookrunner of the bond issuance. Demand was fuelled by global central banks increasing the proportion of the Chinese currency in their reserve portfolios, it said.
The Ministry of Finance is selling two tranches of the green bonds maturing in three and five years, with each being worth 3 billion yuan. The short-dated debt has a coupon rate of 1.42 per cent, while the yield on the longer one is 1.56 per cent. The two tranches mature on June 4, 2029, and on June 4, 2031, respectively.
The proceeds will be used to replenish China’s fiscal budget by funding or refinancing clean-energy projects under its sovereign green-bond framework.
“The first issuance of the green sovereign bond will further optimise the yield curve of Hong Kong’s offshore yuan bonds, offer a new investment benchmark to global capital and attract more cross-border yuan fundraising and transactions to Hong Kong,” said Hong Kong’s Financial Secretary Paul Chan Mo-po, at a ceremony marking the debt offering on Friday. “That will further solidify and boost the function of Hong Kong as a hub for the offshore yuan.”
Global demand for yuan assets has been rising as China pushes for the currency’s internationalisation and global central banks diversify away from the US dollar as their main currency reserve amid Washington’s unpredictable tariff policy and the fiscal stress. The trend has strengthened since the outbreak of the US-Israel war on Iran, with the yuan emerging as the haven asset among investors because of China’s relative insulation from the energy crisis.