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Key Impact Points:
- Record-Breaking Issuance: The Hong Kong Mortgage Corporation Limited (HKMC) issued a US$3 billion equivalent social bond, the largest in Asia Pacific.
- Support for SMEs: Proceeds will finance the Special 100% Loan Guarantee Scheme, aiding around 40,000 local SMEs and 400,000 employees.
- Strong Investor Demand: The issuance attracted a peak order book of approximately HK$55 billion equivalent, with over 200 institutional investors participating.
HKMC Sets New Benchmark in Social Bonds
The Hong Kong Mortgage Corporation Limited (HKMC) has successfully concluded its third social bond issuance, raising around HK$23.8 billion (US$3 billion) equivalent. This marks the largest social bond issuance in Asia Pacific, surpassing the previous record set by HKMC in September 2023.
Details of the Issuance
The triple-currency issuance includes four tranches:
- HK$7 billion 2-year bonds
- HK$8 billion 5-year bonds
- CNH 2 billion 7-year bonds
- US$850 million 3-year bonds
Amid favorable market conditions, the issuance was well-received by a diverse group of high-quality local and overseas institutional investors—including banks, investment funds, government-related funds, and private banks. The combined peak orderbook reached approximately HK$55 billion equivalent, with final allocations to over 200 accounts.
Supporting SMEs Amid COVID-19 Recovery
The net proceeds from the issuance will primarily finance or refinance loans under the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme. Launched in April 2020, this scheme aims to alleviate cash flow pressures for Hong Kong’s small and medium-sized enterprises (SMEs) during the COVID-19 pandemic, helping to minimize business shutdowns and layoffs.
Up to September 2024, the scheme has benefited around 40,000 local SMEs and 400,000 related employees.
Related Article: Deutsche Bank Announces the Issuance of its Inaugural €500 Million Social Bond
Executive Insights
Raymond Li, Executive Director and Chief Executive Officer of the HKMC, stated: “Our record-breaking social bond issuance once again demonstrates investors’ strong confidence in Hong Kong and the HKMC. With financing from a broadened investor base and the participation of a diverse group of financial institutions, the HKMC will continue to deliver on its policy missions, support the local development of sustainable finance, and further solidify Hong Kong’s role as an international financial center.”
Market Impact
- The two Hong Kong dollar tranches totaling HK$15 billion represent the largest-ever institutional bond denominated in HKD.
- The Renminbi tranche is the first-ever 7-year institutional bond denominated in CNH.
- The issuance establishes new benchmarks across the yield curve, facilitating bond market development in Hong Kong.
Acknowledgments
The HKMC expressed appreciation for the professional advice and support from the consortium of 23 local and international financial institutions that acted as Joint Global Coordinators, Joint Bookrunners, Joint Lead Managers, and Joint Structuring Banks.
Commitment to Sustainable Finance
These social bonds are issued under the HKMC’s Social, Green, and Sustainability Financing Framework. Details, including the Second Party Opinion and Impact Reports, are available on the HKMC website.
Bottom Line
This landmark issuance not only underscores HKMC’s commitment to sustainable finance but also provides significant support to Hong Kong’s SMEs, contributing to the economic resilience and stability of the region.