Capital markets News

Second Hong Kong digital green bonds will be multi currency

digital green bonds tokenization

After Hong Kong issued its first digital green bond in February last year, the Hong Kong Monetary Authority (HKMA) previously confirmed it was working on a second issuance. The latest detail to be disclosed by Bloomberg sources is that the bond will be issued in four currencies: the Hong Kong dollar, Chinese renminbi, US dollars and euros.

This fleshes out other details that have leaked over the last several months. Four banks participated in the first issuance: Bank of China (Hong Kong), HSBC, Goldman Sachs, and Credit Agricole. UBS will join the same four banks for the second issuance and all five banks did roadshows last year.

Apart from the Bank of China, the other four banks have tokenization platforms. The first digital green bond used Goldman’s GS DAP tokenization platform. The second bond will use HSBC Orion’s blockchain solution.

At the end of this month, the HKMA will host Green Finance Week, which is likely to coincide with the bond issuance. The first HK$800m ($102m) tokenized green bond issuance is due for redemption around the middle of the year.

The HKMA said the first issuance demonstrated many benefits, including “efficiency, liquidity, and transparency.” However, it also highlighted the need for greater interoperability between DLTs and with legacy systems. It’s unclear how that will change for the second issuance.

At least two other platforms – SDX Exchange and Euroclear’s D-FMI – integrated their DLT networks with legacy central securities depositories (CSDs). This supports the trading and transfer of bonds in the conventional manner as well as digitally.

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