The Hong Kong Special Administrative Region is embarking on the largest-ever digital bond issuance globally to-date, underscoring the deep market liquidity of Hong Kong and accelerating adoption by institutional investors.
The Hong Kong Mortgage Corp (HKMC) on Thursday announced it has successfully priced its inaugural digital bonds equivalent to approximately HK$12 billion ($1.53 billion) under its $30 billion Medium Term Note Program.
With the Issuance, the HKMC also becomes the first public sector entity in Hong Kong to issue digital bonds. The HKMC, established in March 1997, is wholly owned by the Hong Kong SAR government through the Exchange Fund, with the objectives of promoting the stability of the banking sector and the development of the local debt market.
In addition, the five-year Hong Kong dollar tranche of this digital bond issuance represents the longest tenor ever for a Hong Kong dollar-denominated digital bond, setting a new benchmark in the Hong Kong dollar bond market.
The triple-tranche digital bond issuance comprises HK$6 billion two-year, HK$2.5 billion five-year and 3 billion yuan ($442 million) three-year digital bonds.
The Issuance was well received by a diverse group of high-quality institutional investors, including local, Southbound Bond Connect and international institutional investors, spanning multilateral development banks, central banks, banks, private banks, and insurance and asset management companies. The issuance attracted a combined peak orderbook of around the equivalent of HK$24 billion from more than 100 accounts.
The digital bonds are digitally created on a distributed ledger technology platform operated by the Central Moneymarkets Unit (CMU), which also serves as the clearing and settlement system for the digital bonds.
“This landmark digital bond issuance helps deepen Hong Kong’s digital asset ecosystem and accelerate the adoption of tokenization technology in the fixed income market, inspiring a wider range of issuers, investors, intermediaries and other industry stakeholders to embrace this innovative financial instrument,” Hong Kong Monetary Authority Deputy Chief Executive and HKMC Executive Director Howard Lee Tat-chi said.
“The transaction attracted a diverse investor base and enriched the Hong Kong dollar bond market, in line with the HKSAR government’s vision to further strengthen the city’s position as a leading digital assets and fixed income hub,” said David Yim, head of capital markets for Greater China and North Asia at Standard Chartered — one of the joint global coordinators of the issuance.