Linklaters advises on the Hong Kong SAR Government’s first multi-currency digital green bond offering

Linklaters advised the joint lead managers and the fiscal agent on the successful offering of approximately HK$5.9bn multi-currency digital green bonds by the Government of the Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR Government). 

The two-year multi-currency (ie US dollar, euro, HK dollar and Renminbi) digital green bonds were issued in dematerialised book entry form, with the definitive records of legal title to such bonds being maintained using distributed ledger technology on the HSBC Orion* digital assets platform operated by the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority. The digital green bonds are listed on The Stock Exchange of Hong Kong Limited.

The issuance expands digitalisation in the following key areas:

1. The bonds are issued in digitally native format, without the need to first issue in a conventional clearing system and subsequently converted into digital format, making this the first digitally native bond issuance in Hong Kong.
2. Investors may, directly or indirectly, hold the bonds through the CMU as a digital securities intermediary. By connecting to CMU’s traditional clearing and settlement platform, the bonds benefit from CMU’s linkage with Euroclear and Clearstream, thereby reaching a wider pool of investors and enhancing liquidity.
3. The issuer’s green bond documentation can be viewed on the platform, enhancing transparency and information accessibility by platform participants.
4. The bonds adopt the International Capital Market Association’s bond data taxonomy (BDT), a standardised and machine-readable language of key economic terms of a bond, key dates as well as other relevant information typically included within a term sheet. The BDT was developed to promote market efficiency and cross-system interoperability, making this the first issuance by a sovereign, supranational and agency issuer and the first green bond to adopt the BDT.
5. The bonds are denominated in US dollar, euro, HK dollar and Renminbi, respectively, and issued under the HKSAR Government’s global medium term note programme, making this the first multi-currency digital bond offering globally.

The Linklaters’ team was led by capital markets partner Gloria Cheung, with support from financial regulatory partner Kishore Bhindi and capital markets counsel Grace Wee and managing associate Lily Wang. Capital markets counsel Beibei Ding acted as legal adviser to the fiscal agent. 

Linklaters’ capital markets partner Gloria Cheung, commented:

“We are honoured to have participated in the issuance of this path-breaking multi-currency digital green bonds by the HKSAR Government. Our teams are delighted to contribute meaningfully to the growth of Hong Kong as a digital and green bond hub in the region. We look forward to continuing to work with our clients to further promote a sustainable and responsible development of the securities market powered by digitalisation.”

Linklaters is at the forefront of digital securities innovation and has previously advised Euroclear on the development and launch of its Digital Financial Market Infrastructure (D-FMI) and Euroclear and DT Securities (as dealer) on the issuance by World Bank (International Bank for Reconstruction and Development) of the first digital securities on the D-FMI DLT platform.

*HSBC Orion refers to the distributed ledger technology platform deployed by HSBC to the CMU as the platform operator for the purposes of, among other things, recording, clearing and settling the digital green bonds.