Hong Kong Mortgage Corporation completes world’s largest digital bond issuance

Hong Kong has priced its largest-ever digital bond sale at around HK$12 billion (approximately $1.5 billion), extending the city’s push to bring traditional fixed-income markets onto blockchain-based infrastructure.

The Hong Kong Mortgage Corporation (HKMC) said on June 11 that it had completed pricing for the inaugural public digital bond issuance under its $30 billion Medium Term Note Programme. Bookbuilding and pricing were finalized in Hong Kong on June 10 following investor roadshows and pre-marketing activities.

According to HKMC, the transaction consists of three tranches, including a HK$6 billion two-year bond, a HK$2.5 billion five-year bond, and a three-year bond worth RMB3 billion.

Investor demand reached about HK$24 billion equivalent at its peak, with orders coming from more than 100 accounts. HKMC said participants included local investors, Southbound Bond Connect investors, and international institutions such as central banks, multilateral development banks, insurers, private banks, commercial banks, and asset managers.

The issuance surpasses previous tokenized bond transactions completed in Hong Kong and, according to HKMC, is the largest digital bond sale completed globally so far.

Hong Kong expands tokenized bond market

Built using distributed ledger technology, the bonds were issued natively on a blockchain platform operated by Hong Kong’s Central Moneymarkets Unit, which also handled settlement and custody functions.

Beyond the size of the deal, HKMC said the issuance reduced the settlement cycle from five business days to three. Investors were able to access the bonds through existing Central Moneymarkets Unit infrastructure and linked accounts with Euroclear and Clearstream.

Among the three tranches, the five-year Hong Kong dollar bond establishes a new maturity record for a digital bond denominated in Hong Kong dollars, according to the corporation.

Lee Wai Man, deputy chief executive of the Hong Kong Monetary Authority and executive director of HKMC, said the transaction demonstrates support for the Hong Kong government’s strategy of strengthening the city’s role as an international fixed-income and financial center. Lee said the issuance could encourage more issuers, investors, intermediaries, and market participants to adopt tokenized fixed-income products.

HKMC chief executive Raymond Li said strong investor participation during the marketing process helped the institution complete pricing successfully and showed rising interest from both underwriters and investors entering the digital bond market.

Recent developments indicate that Hong Kong is continuing to build infrastructure around tokenized debt markets. Earlier this month, the Hong Kong Monetary Authority announced the formation of a tokenized bond expert group that includes institutions such as JPMorgan Securities, HSBC, Standard Chartered, UBS, Ant Digital, and HashKey Group.

According to the HKMA, the group is examining market practices, regulatory considerations, and infrastructure requirements that could support wider use of tokenized bonds across the financial system.

Government-backed issuance has already played a key role in Hong Kong’s tokenization efforts. Authorities issued HK$800 million of tokenized green bonds in 2023, followed by a HK$6 billion multi-currency digital green bond sale in 2024 that Hong Kong officials previously described as the largest digital bond issuance at the time.

The latest HKMC transaction also arrives one day after South Korea’s KB Kookmin Bank announced a $100 million blockchain-based digital bond sale in Hong Kong. Kookmin Bank said blockchain technology was used throughout issuance, registration, trading, and settlement, reducing settlement times from five business days to three and highlighting growing institutional use of tokenized debt instruments across Asia.