Hong Kong Mortgage Corporation issues Asia's largest social bond
Following its remarkable debut social bond in 2022, the Hong Kong Mortgage Corporation Limited (HKMC) has once again successfully issued another record-breaking social bond on September 13, 2023.
This second social bond issuance for the HKMC, equivalent to over US$2.5 billion and comprising HK$9.5 billion 2-year, CNH 5 billion 3-year and US$650 million 5-year tranches, marks the largest social bond issuance in Asia. The HKD and CNH tranches are the largest social bond issuances in HKD and CNH respectively. The USD tranche also marks HKMC’s return to the public USD bond market since 2009. In addition, it is the first time for a Hong Kong bond issuer to launch HKD, CNH and USD tranches concurrently.
In spite of the rising financial market volatilities, the issuance was well received by a diverse group of high-quality local and overseas institutional investors. It demonstrates investors’ strong demand for financial instruments that are contributing to desired social outcomes. This transaction also reinforces Hong Kong’s roles as an offshore Renminbi business centre and the Asian hub for arranging international green and sustainable bonds.
Similar to the HKMC’s first social bond issuance, the net proceeds will mainly be used to finance or refinance the loans under the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme, which was launched in April 2020 to alleviate the cash flow pressure of small and medium-sized enterprises (SMEs) in Hong Kong during the pandemic, helping to minimise business shut-downs and layoffs. The social bonds and the use of their proceeds are governed by the HKMC’s Social, Green and Sustainability (SGS) Financing Framework, which Crédit Agricole CIB supported the establishment, with a Second Party Opinion provided by Sustainalytics.
Crédit Agricole CIB acted as one of the two Joint SGS Structuring Banks, as well as a Joint Global Coordinator, Joint Lead Manager and Joint Bookrunner on this social bond issuance.
The HKMC is a wholly owned subsidiary of the Exchange Fund managed by the Hong Kong Monetary Authority (HKMA), Hong Kong’s de facto central bank. Crédit Agricole CIB is privileged to have also supported Hong Kong Government’s institutional green bond issuances since 2019, totaling about US$19 billion equivalent, and to contribute to its development as a green and sustainable finance centre and a reference for sustainability in the region and globally.
This first-ever triple currency social bond in HKD, CNH and USD allows the HKMC to further diversify its ESG investor base. With this largest-ever social bond in Asia, the HKMC has set a new benchmark in the social and sustainability bond market.
Head of Debt Capital Markets Greater China
Although the pandemic may appear to be behind us, its lingering impact on SMEs can remain substantial for some. The second HKMC social bond provides continued support and act as a stabilising force for the SME sector via the Special 100% Loan Guarantee Scheme. The HKMC social bond series is a benchmark for the social bond market in Asia with its robustness in structuring and disclosure.
Head of Sustainable Investment Banking Greater China
It has been our great honour to accompany the HKMC and to play various key roles in this meaningful transaction. The success is a reflection of the recognition of the HKMC’s social and sustainable finance initiatives which generates positive impacts to the society.
Managing Director, Financial Institutions Group, Hong Kong
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