Hong Kong Issues HK$1 Billion Digital Bond, Aligns OTC Derivative Rules with Europe

Hong Kong has become the global hub for digital bonds on the blockchain, with enabling regulations and an advanced investor base playing a major role.

HSBC (NASDAQ:HSBC) has issued the first digital bond by a local private entity in Hong Kong, a move that builds on the city-state’s status as a global hub for digital bonds on the blockchain.

The development comes as Hong Kong’s financial watchdogs also announced plans to align their digital asset over-the-counter (OTC) derivative rules with those of the European Union.

HSBC issues HK$1 billion digital bond on Orion platformHSBC has been at the forefront of efforts to tokenize the bond market globally. In February, the bank anchored Hong Kong’s $750 million digital bond, which was the first to fully rely on blockchain technology for issuance and management.

Now, HSBC has issued a HK$1 billion (US$130 million) digital bond on its Orion blockchain platform. The bond is a Hong Kong dollar-denominated digitally native note (DNN) with a fixed 3.6% rate due next year, a T+2 settlement window and is listed on the Hong Kong Stock Exchange (HKEX).

HSBC was the sole coordinator, fiscal agent, registrar and paying agent for the bond. According to the bank, this is the first digital bond to be issued by a private entity in the city and the first to be issued under English law.

“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,” said John O’Neill, head of digital assets at HSBC.

His colleague, Eugene Ng, who heads debt capital markets in Greater China, described the bond as another step towards “the digitisation of Hong Kong’s capital market, setting a benchmark for future digital bond issuances by the private sector.”

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