Alexandra Tracy, Green Finance Advisor of Friends of the Earth (HK)

The biggest green finance news out of Hong Kong so far this year is the release of a second tranche of sovereign green bonds, part of the government’s multi year programme to issue up to HK$100 billion. The proceeds are credited to the Capital Works Reserve Fund and allocated to support projects in areas such as clean transportation, green buildings and air quality improvement.

This time, the government launched green bonds worth US$2.5 billion in total, including US$500 million with a tenor of thirty years. This is the first 30 year green bond to be issued by an Asian government.

As with the first tranche in 2019, there was a strong response from the market. According to media reports, within hours of the books opening, the bonds had attracted more than US$15 billion in investor pledges. How much of this interest was generated by the strong government credit and long dated paper, as opposed to the “green” features of the bonds is not clear. However, Asian institutions do seem to be showing increasing appetite for green financial products, and they were allocated the largest percentage of all the bonds issued.

Hong Kong’s policy makers have always made the point that they hope that the government’s green bond programme – one of the largest to be announced in the world – will stimulate further issuances from companies and financial institutions in Hong Kong, but also more widely in the region. Indeed, there are nine rapidly growing cities in the Greater Bay Area that could look to the success of Hong Kong’s programme for inspiration in their own fund raising plans !

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