Hong Kong is set to start on Monday (May 10) a subsidy scheme to support green and sustainable bond issuance and lending in the city. The Green and Sustainable Finance Grant Scheme, unveiled in the 2021-22 Budget, will provide subsidy for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services.
The programme, which will last for three years, aims to strengthen Hong Kong’s position as a regional green and sustainable finance hub and further enrich the city’s green and sustainable finance ecosystem, Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue says.
According to the guidelines issued by the HKMA, the scheme covers general bond issuance costs (e.g., arrangement, legal, audit, listing fees, etc.) for eligible first-time green and sustainable bond issuers; and transaction-related external review fees (e.g., pre-issuance external review and post-issuance external review or reporting) for eligible green and sustainable bond issuers and loan borrowers, whether first-time or repeat issuers and borrowers.
The grant amount will cover half of the eligible expenses, but limited to HK$2.5 million (US$322,000) where the bond, its issuer or its guarantors possess a credit rating by an HKMA-recognized rating agency, or HK$1.25 million for those without the recognized rating. Each issuer can apply for a grant for two green and sustainable bond issuances at most.
Eligible green and sustainable bonds are those issued in Hong Kong with a size of at least HK$200 million (or the equivalent in foreign currency) and have procured pre-issuance external review services by an HKMA-recognized provider. The issue should be lodged with and cleared by the CMU in its entirety or listed on the Hong Kong Stock Exchange, and at issuance, should be issued in Hong Kong to 10 or more persons, or less than that if none of them is an associate of the issuer.
Eligible green and sustainable loans are those issued in Hong Kong with a size of at least HK$200 million (or the equivalent in foreign currency) and have procured pre-issuance external review services by a recognized provider.
“The global green bond market has grown from practically non-existent ten years ago to US$270 billion in 2020,” Yue says. “In Hong Kong, we have taken early and proactive steps to strengthen Hong Kong’s position as a regional green and sustainable finance hub, including the issuance of two rounds of government green bonds since 2019 and the establishment of the Green and Sustainable Finance Cross-Agency Steering Group to coordinate cross-agency market development efforts.
“The launch of a new Green and Sustainable Finance Grant Scheme to support green and sustainable bond issuance and lending will further enrich the green and sustainable finance ecosystem in Hong Kong.”