Global bank HSBC has issued its first HK$1 billion ($130 million) Hong Kong dollar-denominated senior unsecured fixed rate digitally native notes (DNNs) on the Hong Kong Stock Exchange (HKEX).
The DNNs are 3.6% and due 2025 under the bank’s $20 billion medium term note programme, and were issued with a T+2 settlement window.
FinanceAsia understands that this is the first digitally native bond by a private sector issuer in Hong Kong, as well as the first English law digital bond issuance in Hong Kong.
HSBC Orion, a distributed ledger technology platform, was used to help create and settle the notes. The Hong Kong Monetary Authority’s (HKMA) Central Moneymarkets Unit (CMU) operates HSBC Orion, which digitally native bond issuance and settlement via the CMU’s infrastructure.
HSBC acted as sole global coordinator, sole bookrunner, fiscal agent, principal paying agent and registrar for this transaction.
John O’Neill, group head of digital assets and currencies, HSBC, said in a statement: “We expect to see increasing demand for digital bonds from the private sector if they can access the liquidity and scale seen on our HSBC Orion platform. We look forward to further developing this market.”
Eugene Ng, managing director, head of debt capital markets, Greater China, investment banking, HSBC, added: “This transaction promotes the digitisation of Hong Kong’s capital market, setting a benchmark for future digital bond issuances by the private sector.”
Global law firm Linklaters advised HSBC on the transaction. The Linklaters’ team was led by capital markets partner Gloria Cheung, with support from counsel Grace Wee and managing associate Lily Wang. A separate team led by counsel Beibei Ding acted as legal adviser to the fiscal agent, according to a statement from the firm.
Cheung commented: “Our cross-practice team is honoured to have supported with this unique transaction, drawing on our knowledge and expertise from advising on the pioneering digital bond offerings by the Hong Kong SAR Government. We are excited to be collaborating closely with our clients in the progression of Hong Kong as an international digital bonds hub in the region.”]
Law firm Ashurst also helped HSBC with HSBC Orion on the deal.
Ashurst’s financial regulatory partner and Hong Kong managing partner Ben Hammond, London-based bank industry global co-chair Etay Katz, Hong Kong-based debt capital markets partner and global head of finance, funds and restructuring Jini Lee, and digital economy transaction partner Josh Cole all worked on the deal; they were supported by senior associates Jamie Jefferson Ng, Janet Ouyang and Sean Ching, and associate Anna He.
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