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Retail Green Bonds – Background

The Financial Secretary first announced in the 2021-22 Budget a plan to issue retail green bonds for the participation of the general public.

This website only provides a quick summary of the retail green bonds. You should read the programme circular together with all updates and supplements which HKSAR Government has published. HKSAR Government will also publish an issue circular to specify the terms for each series of retail green bonds. You should read the relevant issue circular as well as the programme circular (as amended or supplemented from time to time) and ensure you fully understand the risks associated with any investment in the retail green bonds, before deciding whether to apply for any retail green bonds.

KEY BENEFITS OF INVESTING IN RETAIL GREEN BONDS
KEY RISKS OF INVESTING IN RETAIL GREEN BONDS
  • Strong credit: HKSAR Government has a strong “investment grade” credit rating.
  • Interest rate risk: The market value of retail green bonds with a fixed rate of interest, or with a rate of interest that includes a fixed rate component, may decrease if the prevailing Hong Kong dollar interest rates increase during the term of those retail green bonds.
  • Regular returns: Retail green bonds offer regular payments of interest for the entire term of your investment.
  • Index risk: The market value of retail green bonds with an interest rate linked to an index may be affected by movements in that index.
  • Interest rate: The retail green bonds may offer higher interest rates than Hong Kong dollar time deposits of similar maturities.
  • Exchange rate risk: The Hong Kong dollar value of retail green bonds denominated in a currency other than Hong Kong dollars will decrease if that currency depreciates against the Hong Kong dollar.
  • Range of maturities: Retail green bonds may be available in a number of different maturities.
  • Liquidity risk: There may not be an active secondary market or any secondary market at all for your retail green bonds and it may not be possible to sell your retail green bonds prior to maturity or the sale price may be lower than the amount you invested.

 

  • Credit risk: The retail green bonds are not secured. When you buy retail green bonds you will be relying on the creditworthiness of HKSAR Government. Adverse changes in the wider economic conditions in Hong Kong and the world and/or the creditworthiness of HKSAR Government may reduce the market value of your retail green bonds and may affect HKSAR Government’s ability to make payments of principal of and interest on your retail green bonds. In the worst case scenario, you could lose all of your investment.

 

  • Intermediary risk: You can only hold retail green bonds indirectly through certain institutions whom you will have to rely on to perform a number of functions, including passing on payments of principal of and interest on your retail green bonds to you and proving your interest in your retail green bonds.

 

  • Green investment risk: The retail green bonds may not necessarily be a suitable Investment if you seek exposure to specific types of green assets. Although the proceeds of retail green bonds will be used to fund projects that fall under one or more of the “Eligible Categories” as set out in the Green Bond Framework, there is currently no market consensus on what precise attributes make a project “green”. Adverse environmental and/or social impacts may also occur during the design, construction, commission and/or operation of such green projects.

 

Note: The Government will only publish electronic versions of the programme circular and issue circular, and will not provide printed copies of these two circulars for the offering of retail green bonds. You can view the electronic versions of the programme circular and issue circular here.