Hong Kong extends digital bond ambitions with 3rd offering
City looking to sell digital green bonds denominated in US dollars, Hong Kong dollars, euros and offshore yuan
HONG Kong is marketing a new set of “digitally native” bonds denominated in multiple currencies, intensifying the city’s drive to become a global hub for digital assets.
The government is looking to sell digital green bonds denominated in US dollars, Hong Kong dollars, euros and offshore yuan, according to people familiar with the matter. The deal could be priced as early as Monday (Nov 10), said the people, asking not to be identified discussing a private matter. If successfully priced, it would mark Hong Kong’s third such sale since 2023.
Digital bonds are debt instruments that utilise blockchain technology for their issuance, trading and settlement. The notes can be issued through distributed ledger technology (DLT) platforms such as those provided by HSBC Holdings or Goldman Sachs, or on public blockchains such as Ethereum, which may offer greater flexibility.
Digital bonds have been gaining momentum in Hong Kong as the government takes steps to encourage tokenised bond issuance. The push has come as policymakers across Asia have been rushing to embrace digital assets, looking to keep pace with US President Donald Trump’s pro-crypto policies.
“Singapore and Dubai have made strong strategic moves in digital assets, posing real competition to Hong Kong,” said Li Han, analyst at Citic Securities. The city’s legal framework still needs clarity on tokenised bonds, as the existing system is designed based on traditional bonds, Li added.
In addition to the government’s bond sales, at least six digital notes have been issued by corporates in the city, raising a total of US$1 billion, with four of those offerings coming this year, according to data compiled by Bloomberg. Two state-backed Chinese companies, Shenzhen Futian Investment Holdings and Shandong Hi-Speed Holdings Group, recently priced such notes in the city.
The latest notes issued by the Hong Kong government would be recorded and cleared using a DLT platform provided by HSBC.
S&P has given the proposed digital notes an AA+ rating, said Rain Yin, a director at the firm. While such securities carry some novel risks, “those are mitigated by a plan that requires, ultimately, shifting the notes to the traditional systems in case of disruption”, she added.
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