Today the Hong Kong Monetary Authority (HKMA) confirmed its first HK$800m ($102m) tokenized green bond issuance. The one year bond was priced at 4.05% and distributed by a syndicate of four banks, Bank of China (HK), Credit Agricole CIB, HSBC and Goldman Sachs.
As we reported earlier this week, the bond used the Goldman Sachs Digital Asset Platform (GS DAP), which runs on a permissioned blockchain. Goldman previously participated in HKMA green bond trials. A tokenized issuance from the European Investment Bank also used GS DAP.
The HKMA’s Central Moneymarkets Unit (CMU) dealt with the clearing and settlement, with a tokenized HKD used for settlement on a T+1 basis. The tokenized cash is a claim against the HKMA. All future settlement and lifecycle events will use the blockchain, which acts as the record of legal ownership.
“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,” said Paul Chain, Financial Secretary. “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.”
Eddie Yue, HKMA CEO, added that the government plans to work with others to conduct further tokenized issuance that ‘push the boundary’.
The bond custodians are the Bank of China (HK) and HSBC, with HSBC acting as the trustee, transfer agent and issuer agent.
Additional details were covered in an earlier article.