Hong Kong’s sustainable debt market, driven by government issuance, has achieved its largest growth yet, leading its peers in the Asian region and entering the global top 10 jurisdictions in green bonds issuance for the first time, according to a recent report.

In 2023, Hong Kong’s debt market experienced the largest growth relative to its historical performance, finds the Hong Kong Sustainable Debt Market Briefing 2023 by the non-profit organization Climate Bonds Initiative. Last year, the aligned volume of green, social, sustainability and sustainability-linked (GSS+) debt originating from Hong Kong reached US$18.2 billion, representing a year-on-year (YoY) increase of 236%.

Most of this debt (US$15.6 billion) was issued under the green theme, while the social theme made up US$2.6 billion. Social and sustainability issuance volumes from Hong Kong issuers grew for a third consecutive year in 2023 to US$2.56 billion, compared with 2022 (US$1.98 billion).

In 2023, for the first time, Hong Kong’s green bond volume reached a level that included it in the global top 10 with impressive YoY growth of 173.3%. This was driven by the record single year growth of US$1.4 billion of Hong Kong government issuance, which made up 92% of the green bond volume (US$14.4 billion), the rest coming from financial corporates.

The Hong Kong government in 2023 was the fourth-largest source of aligned government green bonds (behind that of the UK, Germany and Italy), and is the fifth-largest cumulative government green bond issuer.

Further scale, ambition

“Hong Kong is now one of the top 10 green bond issuers in the world,” says Sean Kidney, Climate Bonds’ CEO. “This leadership is incredibly important in growing the region’s GSS+ bond market and reflects the government’s initiatives to support decarbonization and to connect global capital to green investments in China.”

As conditions improve in post-pandemic Hong Kong, Climate Bond states, there’s an opportunity for this market to boost the volume and quality of its sustainable debt markets, reviving the breadth of the issuer base and restoring private sector issuance to historical levels. 

The Hong Kong government, as part of its 2024-25 budget, indicates that it intends to issue approximately HK$95 billion (US$12.17 billion) to HK$135 billion worth of bonds each year from 2024-25 to 2028-29, demonstrating its commitment to achieve its climate goals of halving emissions by 2035 and reaching net zero by 2050, as well as to position itself as a global sustainable finance hub in the region.

Hong Kong’s strategic location in the region and prominence in global finance, Climate Bonds argues, positions the territory to effectively facilitate mainland China’s decarbonization and transition financing.