Hong Kong’s government has closed its third issuance of tokenised green bonds with orders exceeding the offering by a multiple of four, according to the Financial Secretary, Paul Chan Mo-po. The HK$2bn ($257m) digital notes, settled on a public blockchain and carrying a coupon of 4.25%, were snapped up within hours of launch on November 12th, underscoring investor appetite for instruments that marry environmental credentials with cutting-edge distributed-ledger technology.
The bonds, issued under the Government Green Bond Programme, will fund solar arrays in the New Territories and retrofits of public housing to net-zero standards—projects that align with Hong Kong’s pledge to cut emissions 50% by 2035 from a 2005 baseline. Unlike conventional paper, the securities are represented as ERC-1400 tokens on the Hong Kong Monetary Authority’s (HKMA) Genesis platform, allowing instantaneous settlement and fractional ownership down to HK$1,000. Secondary-market trading begins next week on the HKMA’s central-bank digital currency sandbox, a facility that has already processed over HK$10bn in pilot transactions this year.
Demand was broad-based. European pension funds, which accounted for 38% of allocations, cited the bonds’ AA+ rating by Fitch and the transparency of on-chain cash-flow tracking. Middle Eastern sovereign-wealth vehicles took 22%, drawn by the Islamic-finance-compliant structure approved by the Accounting and Auditing Organisation for Islamic Financial Institutions. Mainland Chinese insurers, restricted to offshore renminbi assets, absorbed 28%. Only 12% stayed with local retail investors, a smaller slice than in prior offerings, reflecting the global reach of the city’s digital infrastructure.
The oversubscription arrives against a backdrop of cooling primary markets elsewhere. Global green-bond issuance is on track for a 9% contraction in 2025, according to BloombergNEF, as rising real yields crimp demand for long-dated fixed income. Yet Hong Kong’s tokenised tranche priced 15 basis points inside its conventional equivalent issued in June, suggesting that blockchain efficiency can more than offset macro headwinds. The HKMA estimates that settlement costs fell 92% compared with traditional clearing, with audit trails immutable and accessible to regulators in real time.
Critics, however, caution that scalability remains unproven. The Genesis ledger, while permissioned, has yet to handle concurrent transfers at the scale of Hong Kong’s $4trn stock market. Moreover, the bonds’ three-year tenor limits their utility for insurers seeking duration. The government has signalled a five-year digital offering in 2026, contingent on upgrades to the underlying Orion blockchain fork.
For now, the issuance burnishes Hong Kong’s claim to be the bridge between mainland China’s vast savings pool and international ESG capital. “Tokenisation is not a gimmick; it is the plumbing for the next decade of sustainable finance,” Mr Chan told journalists at the bond’s virtual roadshow. With $12bn in green digital securities now outstanding, the city is positioning itself as the proving ground where climate goals meet cryptographic rigor. Whether the model exports to less nimble jurisdictions will be the next test.
