The Hong Kong SAR Government (HKSAR) has announced the launch of its Tokenized Green Bonds (TGBs) on February 16. Launched under the Government Green Bond Programme (GGBP), a “successful offering of HK$800 million” of the TGBs is reportedly official.
Announcing the TGB launch, the Hong Kong Monetary Authority (HKMA) tweeted:
Under the HKSAR’s Green Bond Programme (GGBP), the successful offering of HK$800 million of tokenised green bond were announced – the very first issued by a government globally. Learn more here: https://t.co/x08FrD0etK #Greenbondtokenisation #Greenfinance #Fintech2025 pic.twitter.com/uGIXG62ME1
— HKMA 香港金融管理局 (@hkmagovhk) February 16, 2023
Notably, this is the world’s first ever launch of tokenized green bonds by a government. After a recent virtual roadshow,
the one-year, HKD-denominated Tokenised Green Bond was priced yesterday at 4.05%.
The TGBs were reportedly distributed by a four-bank syndicate; two of the four banks are also acting as investor custodians. The HKMA’s Central Moneymarkets Unit (CMU) is acting as the clearing and settlement system for the bond. It leverages on the Goldman Sachs’ tokenization platform (GS DAPTM).
A delivery-versus-payment (DvP) basis settlement was used for the TGB’s primary issuance between securities tokens and cash tokens. The securities tokens here represent beneficial interests in the bond. The cash tokens here represent HKD fiat’s claim against the HKMA, on a T+1 basis on a private blockchain network (PBN).
The bond lifecycle processes (viz. coupon payment, secondary trading settlement, and maturity redemption) are poised for digitalization and initiation on the PBN. The clearance and settlement of TGB is done via the CMU.
So, the settlement of transactions initiated via the CMU tend to reap advantages from statutory settlement finality as per the Hong Kong law. The on-chain records on the PBN would be treated as “the legally definitive and final records of ownership of the securities tokens and cash tokens for the parties on the platform.”
Eddie Yue, Chief Executive, HKMA, 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 HKMA represents the HKSAR Government under the GGBP. It will issue a whitepaper soon to summarize the issuance experience. The said whitepaper would also chart the future steps whilst giving the blueprint for issuing tokenized bonds in Hong Kong.
A Second Party Opinion for the Green Bond Framework has been given by Vigeo Eiris. The TGB is the recipient of the Green and Sustainable Finance Certificate (Pre-issuance Stage) from the Hong Kong Quality Assurance Agency (HKQAA).
