Hong Kong has priced its largest-ever digital bond sale at round HK$12 billion (roughly $1.5 billion), extending the town’s push to deliver conventional fixed-income markets onto blockchain-based infrastructure.
Abstract
- Hong Kong Mortgage Corporation priced a HK$12 billion digital bond sale, which it described as the most important tokenized bond issuance accomplished globally.
- Investor demand reached about HK$24 billion equal, with orders from greater than 100 institutional accounts throughout Hong Kong, mainland China, and abroad markets.
- The blockchain based mostly issuance diminished settlement time from 5 enterprise days to 3 and set a brand new maturity report for a Hong Kong greenback digital bond.
The Hong Kong Mortgage Corporation (HKMC) mentioned on June 11 that it had accomplished pricing for the inaugural public digital bond issuance underneath its $30 billion Medium Time period Be aware Programme. Bookbuilding and pricing had been finalized in Hong Kong on June 10 following investor roadshows and pre-marketing actions.
In keeping with HKMC, the transaction consists of three tranches, together with a HK$6 billion two-year bond, a HK$2.5 billion five-year bond, and a three-year bond value RMB3 billion.
Investor demand reached about HK$24 billion equal at its peak, with orders coming from greater than 100 accounts. HKMC mentioned members included native buyers, Southbound Bond Join buyers, and worldwide establishments reminiscent of central banks, multilateral growth banks, insurers, personal banks, industrial banks, and asset managers.
The issuance surpasses earlier tokenized bond transactions accomplished in Hong Kong and, based on HKMC, is the most important digital bond sale accomplished globally to date.
Hong Kong expands tokenized bond market
Constructed utilizing distributed ledger know-how, the bonds had been issued natively on a blockchain platform operated by Hong Kong’s Central Moneymarkets Unit, which additionally dealt with settlement and custody capabilities.
Past the scale of the deal, HKMC mentioned the issuance diminished the settlement cycle from 5 enterprise days to 3. Traders had been in a position to entry the bonds by way of current Central Moneymarkets Unit infrastructure and linked accounts with Euroclear and Clearstream.
Among the many three tranches, the five-year Hong Kong greenback bond establishes a brand new maturity report for a digital bond denominated in Hong Kong {dollars}, based on the company.
Lee Wai Man, deputy chief government of the Hong Kong Financial Authority and government director of HKMC, mentioned the transaction demonstrates help for the Hong Kong authorities’s technique of strengthening the town’s function as a global fixed-income and monetary middle. Lee mentioned the issuance might encourage extra issuers, buyers, intermediaries, and market members to undertake tokenized fixed-income merchandise.
HKMC chief government Raymond Li mentioned sturdy investor participation in the course of the advertising and marketing course of helped the establishment full pricing efficiently and confirmed rising curiosity from each underwriters and buyers coming into the digital bond market.
Latest developments point out that Hong Kong is continuous to construct infrastructure round tokenized debt markets. Earlier this month, the Hong Kong Financial Authority introduced the formation of a tokenized bond knowledgeable group that features establishments reminiscent of JPMorgan Securities, HSBC, Normal Chartered, UBS, Ant Digital, and HashKey Group.
In keeping with the HKMA, the group is inspecting market practices, regulatory issues, and infrastructure necessities that would help wider use of tokenized bonds throughout the monetary system.
Authorities-backed issuance has already performed a key function in Hong Kong’s tokenization efforts. Authorities issued HK$800 million of tokenized inexperienced bonds in 2023, adopted by a HK$6 billion multi-currency digital inexperienced bond sale in 2024 that Hong Kong officers beforehand described as the most important digital bond issuance on the time.
The newest HKMC transaction additionally arrives someday after South Korea’s KB Kookmin Financial institution introduced a $100 million blockchain-based digital bond sale in Hong Kong. Kookmin Financial institution mentioned blockchain know-how was used all through issuance, registration, buying and selling, and settlement, decreasing settlement instances from 5 enterprise days to 3 and highlighting rising institutional use of tokenized debt devices throughout Asia.
