HKMC Concludes Record-Breaking Social Bond Issuance in Asia Pacific

The Hong Kong Mortgage Corporation Limited (HKMC) has successfully concluded its third social bond issuance, raising approximately HK$23.8 billion, equivalent to US$3 billion. This issuance marks the largest social bond offering in the Asia Pacific region, according to the Hong Kong Monetary Authority.

Issuance Details and Market Reception

The issuance, which was book-built and priced in Hong Kong on October 9, 2024, comprises a triple-currency format with four tranches: HK$7 billion 2-year, HK$8 billion 5-year, CNH 2 billion 7-year, and US$850 million 3-year social bonds. The offering received robust interest from a diverse range of high-quality local and international investors, including banks, investment funds, government-related funds, wealth management, and private banks, with a peak order book reaching approximately HK$55 billion.

This issuance has set new benchmarks across the yield curve, especially with the two Hong Kong dollar tranches totaling HK$15 billion, marking the largest-ever institutional bond denominated in HKD. The Renminbi tranche also broke new ground as the first 7-year institutional bond denominated in CNH.

Utilization of Proceeds

The net proceeds from this issuance will primarily be used to finance or refinance loans under the SME Financing Guarantee Scheme's Special 100% Loan Guarantee. Launched in April 2020 to support small and medium-sized enterprises (SMEs) during the COVID-19 pandemic, this scheme has benefitted around 40,000 SMEs and 400,000 employees as of September 2024. The application period for this initiative concluded in March 2024.

Investor Confidence and Market Impact

Raymond Li, Executive Director and CEO of the HKMC, stated, “Our record-breaking social bond issuance once again demonstrated investors’ strong confidence in Hong Kong and the HKMC.” The success of this issuance is attributed to the participation of a diverse group of financial institutions and a broadened investor base, further solidifying Hong Kong's position as an international financial hub.

The issuance was structured under the HKMC’s Social, Green and Sustainability Financing Framework (SGS Framework), which aligns with global sustainable finance standards. The HKMC acknowledges the professional support from the 23 local and international financial institutions involved as Joint Global Coordinators, Joint Bookrunners, Joint Lead Managers, and Joint Structuring Banks.

Further information on the SGS Framework, including the Second Party Opinion and other related reports, is available on the HKMC’s website.