• Financing
    • Sustainable Financing
    • Raising capital
    • Fixed income

HSBC Delivers World's First Multi-Currency Digital Bond Offering

  • Article

Using HSBC Orion, the bank’s leading digital assets platform, HSBC has successfully helped the Hong Kong Monetary Authority (HKMA) complete a HKD6 billion-equivalent digitally native green bond issuance for the Hong Kong government.

The deal settled on 7 February, and was a first for many reasons, as well as a game-changer for future digital bond issuances:

  • The largest-ever digital bond deal
  • Unprecedented investor demand to-date for a digital bond with over 50 global investors
  • First multi-currency digital bond issuance, across four different currencies (HKD, CNH, USD, EUR)

Unique to this transaction was the use of HSBC Orion by the HKMA’s central securities depository (CSD)* - the Central Moneymarkets Unit (CMU).

In Hong Kong, the CMU operates HSBC Orion, enabling digitally native bond issuance via the CMU system. This means that conventional bonds are not issued into the CMU first and subsequently tokenised on a separate blockchain platform, which would then track the ownership transfer of the bonds. Rather, as part of the CMU's infrastructure, the bonds are directly issued onto HSBC Orion's private permissioned blockchain.

The advantages of doing a digital bond issuance in this way are threefold:

  1. It immediately opens up the global investor base through the CMU’s international linkages with members of other international securities depositories, namely Euroclear and Clearstream, which drives market liquidity for new issuances.
  2. Digitally native issuances on the private blockchain of HSBC Orion means faster settlement times. The typical time for settling conventional bond issuance in Hong Kong is five days (T+5 settlement cycle). For this issuance, it was one business day (T+1 settlement cycle).
  3. Secondary market trade settlements and coupon payments are executed via HSBC Orion, completing the bond’s life cycle.

By integrating HSBC Orion into the CMU and benefitting from the long-standing CMU linkages with international central securities depositories, this landmark transaction has opened up an unparalleled range of investor access options, which is key to driving liquidity in digital bonds.

John O’Neill | Global Head of Digital Assets Strategy at HSBC

HSBC was also Global Joint Coordinator, Global Joint Lead Manager, Global Joint Bookrunner, and Global Joint Green Structurer on the transaction.

The deal team for HSBC was led by Eugene Ng, Managing Director, Debt Capital Markets, Investment Banking, who adds, “We believe this transaction will establish a new benchmark for future digital bond issuances, setting the gold standard in the industry.”

For further information on the Hong Kong’s digital green bond offering, please see the HKMA’s press release.

Asia's booming ETF markets – the next innovation frontier

Asia’s ETF market has grown rapidly to help investors execute their investment strategies.

Need help?

For more information, please contact your HSBC representative.