Hong Kong’s bond market is reaching new milestones with the issuance of the city’s first Central Asian sovereign bond and the debut of Hong Kong’s longest-tenor 30-year Hong Kong dollar government bond. These developments underscore Hong Kong’s growing significance as a key funding gateway for international issuers and a deepening hub for long-term capital, experts say.
Kyrgyzstan announced its issuance of a five-year US dollar benchmark international bond on Wednesday in the Hong Kong Special Administrative Region, marking the first sovereign dollar bond from a Central Asian country in the international capital markets.
The product has been well-received by the market with peak orders exceeding $2.1 billion from over 130 investors. It raised $700 million — $200 million more than initially planned — with a coupon rate of 7.75 percent. The fund raised is to support Kyrgyzstan’s national budget, specifically targeting financing hydroelectric power projects and infrastructure projects.
The deal strengthens Hong Kong’s role as a global debt financing hub and reflects a growing trend of countries participating in the Belt and Road Initiative — starting with Central Asia — shifting offshore fundraising to Hong Kong and exploring diversified financing channels, said Zou Chuan, chief executive officer of TF International Securities Group Ltd, one of the financial partners facilitating the issuance.
Kyrgyzstan's Deputy Minister of Finance Amanbaev Umutzhan Mominovich said: “This is our first step on the international debt capital markets. We are going to maintain our presence and become a frequent issuer for further development of our country’s debt profile and meet the needs of the Kyrgyz Republic economy.”
Another new bond product is the first Hong Kong dollar 30-year bond, the HKSAR government’s longest tenor Hong Kong dollar bond to date. It is among a batch of green bonds and infrastructure bonds scheduled to list on June 10.
The Hong Kong Monetary Authority announced that the sales of the bonds garnered investors from over 30 regions across Asia, Europe, the Middle East, and the Americas, with total orders amounting to approximately HK$237 billion ($30.2 billion), or a subscription ratio of 3.3 to 12.5 times.
The issuances are meant to attract and channel market capital to support green projects, promoting the sustainable development in Hong Kong, and help speed up the development of projects such as the Northern Metropolis, according to Financial Secretary Paul Chan Mo-po.
The green bonds and the infrastructure bonds are being issued in alignment with the HKSAR government's Green Bond Framework and Infrastructure Bond Framework, respectively. Proceeds from the issuance will be allocated to the Capital Works Reserve Fund to finance or refinance eligible green projects and infrastructure projects in accordance with the frameworks.
