The following is issued on behalf of the Hong Kong Monetary Authority:

     The Government of the Hong Kong Special Administrative Region of the People's Republic of China (the HKSAR Government) today (February 16) announced the successful offering of HK$800 million of tokenised (Note 1) green bond (the Tokenised Green Bond) under the Government Green Bond Programme (GGBP). This is the first tokenised green bond issued by a government globally.

     Following a virtual roadshow earlier this week, the one-year (Note 2), HKD-denominated Tokenised Green Bond was priced yesterday (February 15) at 4.05 per cent. It was distributed by a four-bank syndicate, two of which also act as investor custodians. The Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA) is the clearing and settlement system for the bond, leveraging Goldman Sachs' tokenisation platform - GS DAP™.

     The primary issuance was settled on a delivery-versus-payment (DvP) basis between securities tokens (Note 3) representing beneficial interests in the bond and cash tokens representing a claim for HKD fiat against the HKMA, on a T+1 basis across a private blockchain network. Processes of the bond lifecycle, including coupon payment, settlement of secondary trading and maturity redemption, will also be digitalised and performed on the private blockchain network.

     The Tokenised Green Bond is cleared and settled through the CMU, and the settlement of transactions made through the CMU benefits from statutory settlement finality under Hong Kong law. The on-chain records on the private blockchain network will be the legally definitive and final records of ownership of the securities tokens and cash tokens for the parties on the platform.

     As the first tokenised bond governed by Hong Kong law, the offering demonstrates that Hong Kong's legal and regulatory environment is flexible and conducive to innovative forms of bond issuances. The HKMA, as the HKSAR Government's representative under the GGBP, will issue a whitepaper in due course to summarise the experience learnt from this issuance, set out the next steps and provide a blueprint for issuing tokenised bond in Hong Kong.

     The Financial Secretary, Mr Paul Chan, said, "Hong Kong has been proactively promoting the application of innovative technologies in the financial field, and is actively exploring new concepts and technologies to enhance the efficiency, transparency and security of financial transactions. Our Policy Statement on Development of Virtual Assets in Hong Kong issued in October last year sets out that we actively embrace financial innovations related to Web3 and promote steady and prudent market development. The successful issuance of this tokenised green bond marks an important milestone as it demonstrates Hong Kong's strengths in combining bond market, green and sustainable finance as well as fintech. The HKSAR Government will continue to promote the innovative development of the financial market."

     The Secretary for Financial Services and the Treasury, Mr Christopher Hui, said, "Green bond tokenisation is one of the pilot projects announced in the Government's Policy Statement on Development of Virtual Assets in Hong Kong. Through a clear policy stance and roadmap, the Government will work towards providing a facilitating environment to promote sustainable and responsible development of the virtual assets sector. We welcome market participants to conduct tokenised issuances in Hong Kong."

     The Chief Executive of the HKMA, Mr Eddie Yue, said, "Distributed ledger technology (DLT) holds promise for revolutionising the operation of the financial markets. Building on Project Genesis concluded by the HKMA and the Bank for International Settlements Innovation Hub Hong Kong Centre in 2021, the Tokenised Green Bond issuance with on-chain DvP settlement using cash tokens issued by the HKMA is an important step forward in promoting the adoption and realisation of the full potential of DLT in the bond market. Building on the experience from this issuance, the HKMA and the Government will work with other stakeholders to conduct further tokenised issuances to push the boundary and encourage usage."

     The Vice Chairman and Chief Executive of Bank of China (Hong Kong), Mr Sun Yu, said, "Bank of China (Hong Kong) is honoured to be one of the Joint Global Coordinators, Joint Lead Managers and Bookrunners as well as Custodians for HKSAR Government's first tokenised green bond issuance. It demonstrates our commitment to deploy cutting-edge technologies to promote green and sustainable finance in Hong Kong and our persistent support for HKMA's green bond initiatives. This issuance has drawn strong interest from institutional investors and serves as a testament to the diversity and innovativeness of Hong Kong's financial market. We believe that the evolution of virtual assets and its integration into the Government Green Bond Programme will further solidify the city's leading position as a green and sustainable finance hub in the Asia-Pacific region."

     The Chief Executive Officer, Hong Kong Branch & Head of Structured Finance Asia of Crédit Agricole Corporate & Investment Bank, Mr Edouard O'Neill, said, "Crédit Agricole CIB is delighted to have the opportunity to partner with the Hong Kong Monetary Authority on the Hong Kong SAR Government's inaugural tokenised green bond offering. This issuance marks a significant breakthrough in the capital market innovation for Hong Kong and lays a solid foundation for asset digitisation for the other market participants in the region. We are honoured to support the ongoing initiatives to promote the city's green finance and fintech developments."

     The Asia Pacific Head of Digital Assets at Goldman Sachs, Mr Max Minton, said, "This bond is a testament to the HKMA's leadership and innovation in green finance, and marks another significant milestone in the digitalisation of capital markets. We are excited to play a key role in this landmark issuance which utilises Goldman Sachs' tokenisation platform, GS DAP™, to contribute to increased efficiency and digitisation across debt issuances."

     The Chief Executive Officer, HSBC Hong Kong, Ms Luanne Lim, said, "We are proud to continue our longstanding support to the Hong Kong SAR Government's green bond programme through this debut sale of digital green bonds. This deal marks a significant step towards capital markets innovation, and showcases the transformative potential of tokenisation in the bond issuance and asset servicing process. We look forward to continuing our close collaboration with the Hong Kong Monetary Authority and our industry peers in solidifying Hong Kong's position as a regional green finance and fintech hub."

     The Managing Director, Asia Pacific ex-Japan, Fidelity International, Mr Rajeev Mittal, said, "We are delighted to participate in this innovative issuance on behalf of our clients, a huge first step for Hong Kong and for digital assets adoption. We fundamentally believe that distributed ledger technology has the potential to transform financial markets for the better, from democratising access to financial services, to cheaper and more diversified investing through tokenisation."

     The Tokenised Green Bond was issued under the Green Bond Framework of the HKSAR Government. Vigeo Eiris has provided a Second Party Opinion for the Green Bond Framework. The Tokenised Green Bond has also received the Green and Sustainable Finance Certificate (Pre-issuance Stage) from the Hong Kong Quality Assurance Agency.

Summary terms and conditions for the Tokenised Green Bond

Issue size	HK$800 million
Currency	HKD
Tenor	365-day
Issue ratings	A-1+ / F1+ (S&P / Fitch) (on par with the issuer's local currency short-term credit ratings)
Coupon rate	4.05 per cent
Yield	4.05 per cent
Settlement	February 16, 2023 (T+1)
Governing law	Hong Kong law
Use of proceeds	To finance and/or refinance projects that fall under one or more of the "Eligible Categories" set out in the HKSAR Government's Green Bond Framework
Joint Global Coordinators, Joint Lead Managers, Joint Bookrunners	Bank of China (Hong Kong), Crédit Agricole CIB, Goldman Sachs, HSBC (in alphabetical order here and below)
Clearing and Settlement System	CMU operated by the HKMA
Platform Provider	Goldman Sachs
Platform	GS DAP™
Market Practice Adviser	HSBC
Custodians	Bank of China (Hong Kong), HSBC
Trustee; CMU Lodging and Paying Agent, Registrar, Transfer Agent; Issuer Agent on Platform	HSBC
Cash Token Manager	CMU operated by the HKMA
Joint Green Structuring Banks	Crédit Agricole CIB, HSBC
Legal Advisers	Allen & Overy (to issuer), Ashurst (to Platform Provider), Linklaters (to banks and trustee)

 
DISCLAIMER:
NOT FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW.
THIS ANNOUNCEMENT IS NOT MADE BEING MADE AVAILABLE IN, AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION OR DISSEMINATION WOULD BE PROHIBITED BY APPLICABLE LAW. THIS ANNOUNCEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED, AS AN OFFER OF, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE LAWS OF ANY STATE OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE LAWS. THERE WILL BE NO PUBLIC OFFERING OF SUCH SECURITIES IN THE UNITED STATES.

Note 1: Where the beneficial interests in the bond are recorded on settlement in the tokenised securities accounts on a private blockchain network. Wherever the term "tokenised" appears in this press release, this footnote applies.

Note 2: 365-day.

Note 3: See footnote 1.

Ends/Thursday, February 16, 2023
Issued at HKT 16:45

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