On 23 December 2024, KWM represented Zhuhai Huafa Group Co., Ltd. (Zhuhai Huafa Group) on its first issuance of three-year digitally native bonds in an aggregate principal amount of CNY$1.4 billion (US$192million). The bonds are issued by an indirect wholly owned subsidiary of Zhuhai Huafa with a guarantee by Zhuhai Huafa Group. The bonds will be listed on the Hong Kong Stock Exchange and Chongwa (Macao) Financial Asset Exchange Co., Ltd.
The bonds were created in dematerialised book entry format on HSBC Orion and were settled in The Central Moneymarkets Unit of The Hong Kong Monetary Authority (CMU). HSBC Orion is a distributed ledger technology (DLT) platform currently operated by CMU.
This marks the first digitally native bonds issued by a Chinese non-financial enterprise. This is also the first digital bond issuance that has the benefit of a cross-border guarantee provided by a Chinese company. Additionally, the bonds are the first digital bonds constituted on the platform that have a term of longer than one year.
KWM advised Zhuhai Huafa as international counsel on all aspects of the landmark transaction, including bond term structuring, tokenisation related issues, listing and settlement. The KWM team was led by Michael Lu and Andrew Fei with support from Bei Lu, Yuna Lou and Jade Ng.
Michael Lu said: “We are delighted that we once again represented Zhuhai Huafa Group on another groundbreaking transaction. This transaction sets an important and successful precedent for other Chinese corporate issuers who are interested in exploring opportunities presented by innovative financing instruments. We anticipate an increase in demand for digital bonds, particularly if they can benefit from the recent Hong Kong Digital Bond Grant Scheme.”
Andrew Fei said: “This historic transaction illustrates the transformative potential of bond issuances using a blockchain-based technological platform. Congratulations to Zhuhai Huafa Group on achieving this significant milestone”.
Zhuhai Huafa Group Ltd. is a large state-owned conglomerate in the PRC with its business operations primarily conducted in Zhuhai City, Guangdong Province – at the heart of the Greater Bay Area. The group's business consists of six major segments, namely, urban operations, financial services, property development, industrial investment, sales and trading and modern services.
*Any reference to “Hong Kong” or “Hong Kong SAR” and “Macao” or “Macao SAR” shall be construed as a reference to “Hong Kong Special Administrative Region of the People’s Republic of China” and “Macao Special Administrative Region of the People’s Republic of China”.
