2. March 2024

Hong Kong Issues 800M HKD in Tokenized Green Bonds

• Hong Kong’s government announced the issuance of 800 million HKD (roughly $100 million) in tokenized green bonds.
• The bonds were underwritten by four banks and priced at a yield of 4.05%.
• The platform used Goldman Sachs’ tokenization protocol GS DAP, which uses a private blockchain network to settle security tokens representing the beneficial interests of bonds in a T+1 payment-vs-payment manner and cash tokens representing claims on the Hong Kong dollar.

Hong Kong Issues Tokenized Green Bonds

The government of Hong Kong announced on February 16th that it had issued 800 million Hong Kong dollars (roughly $100 million) in tokenized green bonds under its Green Bond Programme. The bonds were underwritten by four banks and priced at a yield of 4.05%.

Tokenization Process

Tokenization, the process of representing assets or securities as digital tokens, is a relatively new concept in the financial world. By using blockchain technology to create digital tokens, issuers can provide more transparency, efficiency, and accessibility in the issuance and trading of securities. This move toward the digital settlement marks a significant shift from traditional settlement processes, which often rely on manual verification and paper-based documentation.

Benefits Of Tokenization

The successful issuance of tokenized green bonds marks a milestone for Hong Kong according to Financial Secretary Paul Chan who said: “Hong Kong has been actively promoting the application of innovative technologies in the financial sector, actively exploring new concepts and technologies to improve the efficiency, transparency, and security of financial transactions.” It highlights the growing adoption of blockchain technology among governments around the world looking to modernize their financial systems with increased levels of transparency and trustworthiness.

Goldman Sachs Protocol Used

The platform used Goldman Sachs’ tokenization protocol GS DAP for this bond issuance which uses a private blockchain network to settle security tokens representing beneficial interests as well as cash tokens representing claims on Hong Kong dollars through T+1 payment-vs-payment manner.

Conclusion

Overall, this successful issuance shows just how far tokenization has come since its introduction into finance markets around the world and how governments are now turning towards it for their own use cases such as issuing green bonds or other forms of asset management solutions.