Hong Kong's first green bond for retail investors slipped on its first day of trading, a disappointing start for supporters of environmentally sustainable investments following its oversubscription two weeks earlier.
The three-year note started trading at HK$99.70 per HK$100 bond on Thursday. The bond offers a 2.5 per cent return on a minimum investment of HK$10,000 (US$1,274). Its HK$20 billion offering was touted by Hong Kong's government to be the biggest retail green bond issuance globally.
It was a hit among retail investors, attracting 493,000 investors to pour HK$32.88 billion (US$4.2 billion) into the offering, translating to an oversubscription rate of 1.2 times on May 6.
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The bond will pay interest every six months, based on the inflation rate over that half-year period. It is guaranteed at a minimum of 2.5 per cent, which is more generous than the minimum 2 per cent rate on similar inflation-linked bonds known as iBonds.
Green bonds are fixed-income financial products designed to fund environmentally friendly projects. The offering forms an important part of Hong Kong's plan to increase the use of wind and solar power, and waste-to-energy projects to generate electricity as the city strives to achieve carbon neutrality by 2050.
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