Hong Kong issues first tokenised green bonds

Hong Kong first tokenised green bonds

Allen & Overy, Linklaters and Ashurst have acted on the debut of HKD800 million (USD1.02 million) worth of government-issued tokenised green bonds in Hong Kong, the first of its kind in the world.

Hong Kong-based partner Agnes Tsang led Allen & Overy’s team, with support from partner Jaclyn Yeap from the Singapore office.

Joint lead managers, Bank of China, Credit Agricole, Goldman Sachs and HSBC, tapped Linklaters as their counsel, advised by leading capital market partners Gloria Cheung in Hong Kong and Jonathan Horan in Singapore. Counsel and head of securitisation Mary Matson acted as legal adviser to the trustee HSBC.

Ashurst advised Goldman Sachs on the use of the tokenisation platform GS DAP. Banking industry global co-chair Etay Katz along with financial regulatory partner and Hong Kong managing partner Ben Hammond led the team.

Other members included Hong Kong-based debt capital markets partner and global finance, funds and restructuring finance division co-head Jini Lee, London-based digital economy partner David Futter, capital markets partner Alex Biles, commercial litigation partner James Levy, and Melbourne-based partner Jeff Lynn, who advised on environmental and climate change law.

The one-year Hong Kong dollar-denominated bond with a yield of 4.05% would be cleared and settled by the Central Moneymarkets Unit of the Hong Kong Monetary Authority (HKMA), leveraging Goldman Sachs’ tokenisation platform.

As the first tokenised bond governed by Hong Kong law, the government said it was not for distribution in the US, Canada, Japan or any other prohibited jurisdiction.

Eddie Yue, chief executive of the HKMA, said it would work with other stakeholders to conduct further tokenised issuances based on this experience.

As the Hong Kong government has taken a more open approach to cryptocurrencies since last year, the Securities and Futures Commission announced on 20 February that a new licensing regime for virtual asset service providers would be launched in June, allowing retail investors to trade on legal platforms.

The city has also made efforts to offer green bonds in recent years, issuing the largest ESG bond in Asia in January, which was advised by Allen & Overy on international law.