Hong Kong bond markets, yuan issuance to expand in 2026 under HKMA, SFC road map

Hong Kong is expected to see a rise in bond issuance across multiple currencies in 2026, driven by rising demand for non-US dollar assets amid geopolitical tensions and government initiatives to strengthen the city’s capital markets, according to industry players.\nAs part of efforts to promote the local bond market, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) launched a blueprint in September to expand yuan-linked products and widen the investor base for fixed-income offerings.\nSome measures have already been rolled out, such as the launch of the cross-border repo business at the end of September. More initiatives were expected in 2026, with the collateral management of repo transactions set to shift from manual to automated processes from February 2, according to the HKMA.\n“The road map issued by the HKMA and the SFC is important in setting the direction for the future development of the Hong Kong bond market and currency trading,” said John Lee Chen-kwok, vice-chairman and co-head of Asia coverage at UBS in Hong Kong, one of the leading arrangers of major bond deals in the city.\n“The Hong Kong bond market is expected to continue to grow in 2026 after strong development over the past two years, with many big names such as the Airport Authority Hong Kong, Urban Renewal Authority, MTR Corp, Hong Kong Mortgage Corp and the Hong Kong government.”\nIssuance had become more diversified, with bonds denominated in Hong Kong dollars, yuan and US dollars, Lee said. “The growth is due to government promotion of the bond market and also the introduction of Bond Connect, which attracts more issuers to Hong Kong to tap mainland investors through the connect scheme.”\n\nHong Kong dollar bond issuance reached a record HK$331 billion (US$42.5 billion) as of November, nearly 37 per cent higher than 2024’s full-year total of HK$242 billion.\nYuan-denominated dim sum bond issuance also hit a record 475 billion yuan (US$67.8 billion) as of August and was expected to surpass last year’s record of 700 billion yuan.\nThe road map also emphasises plans for an electronic trading platform, which Lee said would be vital to support tokenised bond issuance, as well as the establishment of a digital trading platform.\n“Hong Kong could also see more green bond issuance, as Chinese and Asian issuers continue to invest in green projects that need funding,” Lee said.\nGreen finance would be a growth driver for fixed-income and currency markets in the city, according to analysts. Hong Kong accounted for 45 per cent, or US$43 billion, of the total green bonds issued in Asia in 2024, according to government statistics.\n“Hong Kong is a good venue for promoting green finance products, such as green bonds or green loans, because the city has a lot of buildings that are in the process of upgrading their environmental standards,” said Wang Jing, vice-president of North Asia at the US Green Building Council.\nIn the first 11 months of 2025, the US Green Building Council issued over 80 Leadership in Energy & Environmental Design (LEED) certificates to Hong Kong buildings, confirming their facilities met international energy-saving standards, Wang said.\nHong Kong has about 500 properties, including the IFC and Landmark, currently pursuing LEED certification, an internationally recognised standard that verifies a building’s energy efficiency.\n“A lot of Hong Kong buildings want LEED certification because of green finance, especially when fundraising requires international investors or banks,” Wang said.\nA prime example is a HK$375 million, 10-year green bond issued by Hong Kong Land to finance energy-efficiency upgrades at 12 office buildings to achieve top LEED standards, which Wang said showed how energy-saving projects could promote green bond development in the city.\nThe timing is favourable to promote multi-currency bond issuance, as investors shift away from US dollar assets and look to diversify.\nAaron Costello, head of Asia at Cambridge Associates, said while US investors remained largely on the sidelines, there was increasing appetite among Middle Eastern and Asian investors for Hong Kong and China markets.\n“There is increased interest in non-US assets broadly to diversify away from US equity concentration risk and the US dollar, which on the margin should result in increased flows to Asia, including Hong Kong and China,” Costello said. “Given many global investors remain underweight China and Asia, there is scope for more capital to flow to the region, especially if the US dollar continues to depreciate.”\n