Quick Take: Hong Kong Plans First Government-Backed Green Bond

Hong Kong’s de facto central bank aims to issue the city’s first government-backed green bond next year, the South China Morning Post reported.

Green bonds are nascent debt-financing tools for projects that address climate change and other environmental problems. Last year, China surpassed the U.S. as the world’s largest issuer of green bonds.

Hong Kong, however, has only three issuers so far — subway operator MTR Corp., shopping-mall landlord Link Real Estate Investment Trust, and wind-turbine maker Xinjiang Goldwind Science & Technology Co. Ltd.

The upcoming issue by the Hong Kong Monetary Authority is part of the city’s ongoing effort to deepen its fixed income market and create a benchmark for green bonds, the Post reported.

“This is a new concept, even some international ratings agencies have just started developing it. There is room for Hong Kong,” James Lau, secretary for financial services and the treasury, told the Post.

The HKMA’s issuance will actively promote China’s “Belt and Road” initiative and attract more international investors to the city’s capital markets, a HKMA spokesperson was quoted as saying.

A spokesman at the Hong Kong Stock Exchange told the Post the bourse is “open to exploring any innovative financial initiative that comes to our attention.”

Contact reporter Aries Poon (ariespoon@caixin.com)