Global Market: Hong Kong sets pricing guidance for four-year digital green bond

Hong Kong's government has launched a benchmark-sized, four-year euro-denominated green bond in digital form, with initial pricing guidance set at 11 basis points above mid-swaps, according to a term sheet reviewed by Reuters on Monday.

The bond is scheduled to settle on Tuesday, with the final issue size and coupon yet to be determined. It will carry a fixed coupon that will be paid twice a year.

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The government plans to list the bond on the Hong Kong Stock Exchange. Proceeds will be used to finance or refinance eligible environmental projects under Hong Kong's Green Bond Framework.

The transaction marks another step in Hong Kong's efforts to expand the use of digital infrastructure in capital markets. The bonds will be recorded electronically rather than issued as paper certificates, with HSBC's Orion digital platform being used for issuance, Reuters reported.

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Settlement and clearing will take place through the Hong Kong Monetary Authority's Central Moneymarkets Unit, which is linked to international securities depositories Euroclear and Clearstream, according to the term sheet.

The digital format is designed to integrate the bond with existing financial-market infrastructure while enabling the government to raise funds for projects that meet its environmental financing criteria.

Hong Kong carries Aa3, AA+ and AA- sovereign ratings from Moody's, S&P and Fitch, respectively.

The transaction comes as governments and financial institutions increasingly explore digital bond issuance, including the use of electronic platforms and distributed-ledger technology, to streamline issuance and settlement in capital markets, Reuters reported.

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