The transaction was executed following a global roadshow commencing on May 10, covering Hong Kong, London, Paris, Frankfurt, Amsterdam, Boston, New York and Singapore.
The offering attracted strong demand from a diverse group of conventional and green investors despite the recent financial market volatility. The issue size was about 4x covered as the order book was in excess of US$4 billion from over 100 global institutional investors, which allowed for the tighter pricing.
From the initial price guidance of 50bp area, it was revised to between 40bp and 45bp, and again to final price guidance of 35bp area (+/- 2.5bp).
“The favourable response from global investors indicates not only their recognition of Hong Kong’s credit strength, but also their support of Hong Kong’s determination and efforts in promoting sustainable development and combatting climate change,” says Hong Kong financial secretary Paul Chan
In terms of geographic distribution, 50% of the bonds were distributed in Asia, 27% in Europe and 23% in the US. By type of investors, sovereign wealth funds, central banks and supranationals were the biggest buyers of the paper with 41%, followed by fund managers, private banks and insurance companies with 30% and banks 29%.
“This landmark transaction establishes a green government benchmark in Hong Kong, further supporting its development as a leading green finance centre. The breadth and depth of the order book demonstrates the increasing maturity of the green bond markets in Asia – both from an issuer and investor perspective,” says Sean McNelis, co-head of debt capital markets for Asia-Pacific at HSBC, which acted as the joint green structuring bank, global coordinator, lead manager and bookrunner for the transaction, along with Credit Agricole CIB.
The bond proceeds will be credited to the capital works reserve fund to finance or refinance public works’ projects that provide environmental benefits and support the sustainable development of Hong Kong. These projects are related to water and waste water management, waste management and resource recovery, green buildings, and energy efficiency and conservation.
The transaction represented the inaugural green bond issuance under the HK$100 billion (US$12.80 billion) HKSAR government green bond programme. To facilitate the programme, the government has established a best-in-class green bond framework with a second party opinion obtained from Vigeo Eiris conforming with the Green Bond Principles.
The maiden issue has also received the green finance certificate from the Hong Kong Quality Assurance Agency.
Source: The Asset