Hong Kong Raises $1 Billion in First Dollar Green Bond Deal

(Bloomberg) -- Hong Kong sold its first ever green bond denominated in U.S. dollars on Tuesday, to become the second Asian government after Indonesia to raise such debt.

The $1 billion five-year green bond will yield 32.5 basis points over Treasuries, according to data compiled by Bloomberg. Indonesia priced a green dollar sukuk earlier this year after its first such sale in 2018, the data show.

“Sovereign names from Asian countries are limited," Pheona Tsang, chief investment officer of fixed income at BEA Union Investment Management Ltd, said before the deal was priced. "Investors looking for diversification can widen their choice of investment from infrequent issuers like Hong Kong SAR.”

Hong Kong had set an initial price guidance for the offering at around 50 basis points over Treasuries and later revised it to 40 to 45 basis points, according to a person with knowledge of the price talk, who asked not to be identified because the matter is private. The government had targeted a deal size of $500 million to $1 billion, the person said.

Hong Kong last came to the dollar bond market in 2017 with a $1 billion sukuk due 2027.

The proceeds of Hong Kong’s new bond sale will be used to finance projects that provide environmental benefits and support the sustainable development of Hong Kong, according to the bond offering circular. The notes will be issued under the Government Green Bond Program, under which it can raise as much as HK$100 billion ($12.7 billion), it said.

--With assistance from Rizal Tupaz and Allan Lopez.

To contact the reporter on this story: Annie Lee in Hong Kong at olee42@bloomberg.net

To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, Lianting Tu

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