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Hong Kong Bond Market

Hong Kongu2019s bond market is one of the largest in Asia. Both issuers and investors from China and the rest of the world have participated in this market across domestic and foreign currencies. The bond market is also known for the offshore Renminbi bond issuances, also known as Dim Sum Bonds.

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Hong Kong Bond Market

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  1. Hong Kong Bond Market Hong Kong’s bond market is one of the largest in Asia. Both issuers and investors from China and the rest of the world have participated in this market across domestic and foreign currencies. The bond market is also known for the offshore Renminbi bond issuances, also known as Dim Sum Bonds. The government has also taken a step in the green bond space since 2018 under the Government Green Bond Programme to showcase their support for sustainable development alongside contribution towards the climate and to promote the development of green issuance. In 2019, Hong Kong dollar debt issuance totalled HK$4.18tn which was 2% higher than that in 2018. The Hong Kong Monetary Authority (HKMA) reported that HK$ issuance increased for a eleventh consecutive year last year, primarily driven by Exchange Fund Bills and Notes (EFBN) at HK$3.39tn. The overall outstanding size of Hong Kong dollar debt instruments were at HK$2.17tn. In May 2019, the Government of the Hong Kong Special Administrative Region (HKSAR) of the People’s Republic of China offered its maiden green bond under the Government Green Bond Programme, with an issuance size of $1bn and a 5 year maturity. Additionally, two Sukuks issued under the Government Bond Programme were outstanding, each with an issuance size of $1bn. Overall, bond issuance by foreign issuers reduced in 2019 mainly owing to financial institutions and corporates. Local currency bonds outstanding across central banks, corporates and the government almost totalled to nearly $300bn in the quarter ending March 2020. The total value of outstanding Hong Kong dollar debt instruments remained stable over 12 months prior to March 2020. Dim Sum bonds, termed after the popular delicacy are quite popularly known in the bond markets of Hong Kong with China Development Bank issuing the first Dim Sum bond in Hong Kong SAR in 2007 post which the Ministry of Finance in China issued RMB 6bn of Treasury Dim Sum bonds. While the Hong Kong bond market is well known for Dim Sum bond issuances which have picked up since debut, compared to the total Renminbi liquidity pool in Hong Kong, the outstanding size of Dim Sum bonds are quite small – around 0.9% of offshore renminbi deposits as of March 2018 going by the IMF’s analysis. Most of the bond trading happens in the Over-the-counter (OTC) markets. Some bonds may be listed and traded on the Stock Exchange of Hong Kong Limited (SEHK), which is a wholly-owned subsidiary Hong Kong Exchanges and Clearing Limited (HKEX).

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