Hong Kong secures US$3.5 billion to fund Northern Metropolis and green projects

Hong Kong has raised HK$27.6 billion (US$3.5 billion) through a green and infrastructure bond sale to finance the Northern Metropolis and low-carbon transformation projects. The offering drew investors from more than 30 markets across Asia, Europe, the Middle East and the Americas, signalling global institutional investors’ confidence in Hong Kong’s development, the Hong Kong Monetary Authority said in a statement on Friday. Orders totalled about HK$239 billion, 8.6 times the offer size. The issuance “raises capital for key infrastructure projects, including the Northern Metropolis, thereby easing early project completion for the good of the economy and people’s livelihood,” said Financial Secretary Paul Chan Mo-po in the statement. “Government green bonds support low-carbon transformation projects and consolidate Hong Kong’s development as a green and sustainable finance hub.” The deal comprised five tranches across four currencies: HK$3 billion 30-year infrastructure bonds priced at 3.95 per cent; two renminbi tranches of 6 billion yuan (US$882 million) each – a 20-year tranche at 2.6 per cent and a 30-year bond at 2.7 per cent; a US$500 million five-year infrastructure tranche at 4.052 per cent; and a 750 million euros (US$882 million) eight-year green tranche at 3.119 per cent. The bonds were priced after a virtual roadshow on May 6 and are expected to settle on May 14, with listings on the Hong Kong stock exchange and the London Stock Exchange. “The government has continued to issue longer-tenor HKD and RMB bonds to … foster the development of the fixed income and currency markets,” Chan said. “Issuance of RMB bonds will further enrich offshore RMB product offerings, improve the offshore RMB yield curve, and promote RMB internationalisation.” He added that the “enthusiastic response from global institutional investors to the subscription reflects their confidence in the development prospects of Hong Kong”. Hong Kong’s bond market has been active this year, with major deals including a record HK$18.8 billion green bond from MTR Corporation and a HK$19 billion offering by Airport Authority Hong Kong. Strong investor demand for Hong Kong dollar assets has driven an 87 per cent year-on-year increase in debt issuance. Earlier this year, the government announced plans to transfer HK$150 billion from the Exchange Fund to the Capital Works Reserve Fund over two years to accelerate Northern Metropolis development, a rare move not seen since 1984. The Northern Metropolis project, announced in 2021, aims to transform 30,000 hectares of land in the New Territories near the border with mainland China into a centre for innovation and technology, with up to 500,000 new homes and 500,000 jobs, as part of the city’s integration into the Greater Bay Area.