The Hong Kong Special Administrative Region unveiled its revised plan for an enlarged debut. It is a green future bond offering above $2.55bn. It is to turbocharge the sovereign retail green bond market. Soon, this three-year new issue would be on sale to individual investors in China.
Paul Chan, a financial secretary wrote in his official blog that they will relaunch the issuance shortly if the epidemic situation is gradually subsided. The deal is in the form of combinations. The combination is the HK$6bn the government sought to raise early this year plus all the allocated volume of product in the new financial year. The initial price would be HK$15bn, it could raise as much as HK$20bn if there’s more demand. Due to the rise of interest rate in the environment, the inflation linked deal raised 0.5% from 2% to 2.5%.
This scheme is actually the same with Hong Kong’s non-green iBond and the retail bonds’ Silver Bond.
These bonds are three-year instruments with floored inflation-linked payouts. It is on the SAR‘s composite consumer price index. The calculation is from the government’s household expenditure survey. So, the former could be trading like a bond with a Green Future.
All of those scenarios pay the higher of the floor rate and the average of the index’s most recent monthly year on year rates of change, said IFR Asia. However, it is still uncertain on whether or not they could retain the two-week subscription week. It is still unsure also on how they could extend the size.
On the other hand, combining deals after the chaos of Hong Kong’s Covid-19 fifth wave inflicted deal postponement. So, it could save issuance costs and administrative work. According to Chan, it helps them to make greater flexibility in timing for the later issuance of iBond and Silver Bond.
