On October 16, the Hainan provincial government held a conference at the Hong Kong Monetary Authority on issuing a new round of offshore RMB local government bonds in Hong Kong. The event was aimed at mainly Asian and European investors, with 50 institutions from a total of nine countries and regions participating.

(Photo: Hainan Daily)

(Photo: Hainan Daily App)

The following day, a total of 3 billion yuan ($0.4 billion) in Hainan 2024 offshore RMB local government bonds were priced and issued in Hong Kong, including 3-year sustainable development bonds with a pricing interest rate of 2.07%, 5-year bonds at 2.15%, and 10-year green bonds at 2.45%. Orders peaked at 36 billion yuan ($5 billion), 12 times the amount of bonds issued and marking a record high. 

This is the first time for Hainan to issue a 10-year offshore RMB bond, further enhancing the portfolio of RMB financial products in the Hong Kong market and strongly supporting the internationalization of the RMB. This is also the first time for bond fund settlement to be made through a Hainan FTP multifunctional free trade account (EF account), realizing the effectiveness of EF accounts in the free and convenient trade of diversified cross-border funds.

This is the third time for Hainan to issue offshore RMB local government bonds in Hong Kong, following the province's successful issuance of China's first blue bonds, first sustainable development bonds, and first biodiversity-themed green bonds issued by a local government in Hong Kong in 2022 and then again in 2023.

The funds raised through these bonds this year will be mainly invested in projects benefiting the local population such as medical care and education, in key areas such as marine biodiversity protection and water environment management, and to support key projects such as the development of Wenchang International Aerospace City. These bonds have been listed as eligible collateral for RMB liquidity arrangements by the Hong Kong Monetary Authority, and interest on the bonds as well as income from the disposal of the bonds will be exempt from Hong Kong profit tax and stamp duty, greatly enhancing their attractiveness for investors.