UBS joins Hong Kong’s second digital green bonds issuance

UBS, a leading financial institution, has joined Hong Kong’s second digital green bond issuance, according to reports. The government plans to release digital bonds, and UBS Group AG is now among the banks participating in this initiative, including HSBC Holdings, Bank of China (Hong Kong), Credit Agricole CIB, Goldman Sachs, and the Industrial and Commercial Bank of China. The Hong Kong Monetary Authority (HKMA) will collaborate with these banks to explore the feasibility of a multi-series fixed-rate digital bond issuance. To ensure smooth operations, the HKMA will form a working group consisting of representatives from these financial institutions. The bond issuance and clearance will be recorded on HSBC’s distributed ledger Orion, which the HKMA believes will reduce costs and delays associated with traditional issuances. Hong Kong had previously launched a successful digital bond offering called Project Evergreen with the help of Goldman Sachs’ Digital Asset Platform. The upcoming green bonds, with a target launch in February 2024, will offer a 4.05% return and are already being promoted through road shows organized by participating banks. However, there are risks associated with digital bonds, including cyberattacks, low adoption levels, and the potential impact of regulatory changes.