Hong Kong Issues First Social Bonds under HKD 30 Billion Program: 2-Year HKD 8 Billion & 3-Year CNH 3 Billion Social Bonds with Over 100 Institutional Investors
27th October 2022 | Hong Kong
Hong Kong has issued its first (inaugural) social bonds under the HKD 30 billion bond program, with the successful issuance of the 2-Year HKD 8 billion at 5% coupon ($3 billion) & 3-Year CNH 3 billion at 3.4% coupon ($420 million) social bonds with participation from over 100 institutional investors. The Hong Kong Mortgage Corporation (HKMC) had created a newly-established Social, Green and Sustainability Financing Framework (SGS Framework) under the $30 billion Medium Term Note Programme in the institutional market. A social bond is a conventional bond where the proceeds will be exclusively applied to finance eligible social projects or loans that create positive social impact for a targeted population. Following a series of investor roadshows, the Issuance was book-built and priced in Hong Kong on 18th October 2022. The transaction marks the world’s first social bond issuance in dual-tranche denominated in Hong Kong dollar (HKD) and offshore Renminbi (CNH). See the terms of issuance: Click here
“ Hong Kong Issues First Social Bonds under HKD 30 Billion Program: 2-Year HKD 8 Billion & 3-Year CNH 3 Billion Social Bonds with Over 100 Institutional Investors “
Raymond Li, Executive Director & Chief Executive Officer of the HKMC: “The establishment of the SGS Framework and the inaugural social bond issuance demonstrate the HKMC’s commitment to delivering socially responsible products and services. The issuance, which meets growing investor demand for financial instruments fulfilling sustainability objectives, has also provided a good opportunity to further diversify the HKMC’s funding source and investor base. The HKMC will continue to support the development of sustainable finance and the debt market in Hong Kong.”
Hong Kong 2-Year HKD 8 Billion & 3-Year CNH 3 Billion Social Bonds
The net proceeds from the Issuance will mainly be used to finance or refinance the loans under the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme. The Special 100% Loan Guarantee was launched in April 2020 to alleviate the cash flow pressure of small and medium-sized enterprises (SMEs) in Hong Kong during the COVID-19 pandemic, helping to minimise shut-downs and layoffs. It has benefitted more than 33,000 local SMEs and 350,000 related employees up to early October 2022.
The use of proceeds of the Issuance is governed by the SGS Framework, with a Second Party Opinion provided by Sustainalytics. Details of the SGS Framework and the Second Party Opinion are available at this link
(A social bond is a conventional bond where the proceeds will be exclusively applied to finance eligible social projects or loans that create positive social impact for a targeted population.)
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