The Hong Kong Government[1] has issued HK$800 million 4.05% tokenised green bonds with a one year tenor under its HK$200,000,000,000 Global Medium Term Note Programme (the “Tokenised Green Bond”).
This was the pilot issuance by the Hong Kong Government in which interests in the Tokenised Green Bonds are recorded in tokenised securities accounts on a distributed ledger technology-based platform (“Platform”) provided by Goldman Sachs (Asia) L.L.C. (“Goldman Sachs”) as an extension of the Central Moneymarkets Unit. Payments of principal and interest under the Tokenised Green Bonds are made in the form of cash tokens, representing fiat monies claims against the Hong Kong Monetary Authority. The issuance is expected to be a test of “the compatibility of Hong Kong’s existing framework, financial infrastructure and market operational practice.”[2]
The King & Wood Mallesons (“KWM”) debt capital markets team (led by KWM partners Richard Mazzochi and Minny Siu) and fintech team (led by KWM partner Urszula McCormack) are delighted to have advised The Hongkong and Shanghai Banking Corporation Limited and HSBC Nominees (Hong Kong) Limited (together, “HSBC”) in respect of their roles as CMU Member, Tier 1 Participant on the Platform, a Platform participant and custodian on the Platform. HSBC will custody interests in the Tokenised Green Bonds for underlying noteholders. In advising HSBC, KWM worked closely with Goldman Sachs and its advisers to navigate the complex and novel legal, regulatory and contractual considerations in respect of the “digitisation” of the Tokenised Green Bonds.
As the global trends of sustainable financing, tokenisation and capital markets digitalisation continue, KWM looks forward to continuing to work with our clients on ground-breaking transactions and other key developments in the digitalisation of global capital markets.
[1] The Government of the Hong Kong Special Administrative Region of the People’s Republic of China.
[2] Joseph Chan, Under Secretary for Financial Services and the Treasury of The Government of Hong Kong Special Administrative Region of the People’s Republic of China.
