Shenzhen announced Monday that it will issue offshore Renminbi (RMB) local government bonds of no more than 5 billion yuan (US$684.5 million) in Hong Kong in the near future, Shenzhen Special Zone Daily reported.
The bonds will be listed on the Hong Kong Stock Exchange, offering more RMB asset allocation options for international investors.
The bonds will have maturities of two, three and five years. The ones with maturities of three and five years are green and blue bonds.
It will be Shenzhen’s second time to do so after it took the country’s lead in issuing offshore RMB local government bonds last year.
The city will issue blue bonds for the first time for water pollution control projects that aim to improve the quality of offshore and marine environments by reducing the amount of sewage and pollutants in rivers entering the sea.
The green bonds with maturities of three years will be used to promote clean and low-carbon rail transit and continue to invest in supporting green development.
The financial cooperation between Shenzhen and Hong Kong will also be strengthened, according to the Daily report.
This year, Shenzhen will continue cooperating with Hong Kong in the whole process of bond certification, roadshows and bond trusteeship.
It is reported that the bonds’ interest income will be exempted from Hong Kong’s profits tax and stamp duty. In addition, the bonds have been included in the list of eligible collaterals for the RMB liquidity arrangement by the Hong Kong Monetary Authority, further improving bond liquidity.
According to the Shenzhen Municipal Finance Bureau, the offshore local government bonds issued last year were oversubscribed by 3.48 times, which reflected the international capital market’s recognition of Shenzhen’s development and government credit.
The bureau said the issuance this year will help stabilize investor expectations and promote the international capital market’s long-term value investing in Shenzhen. It is also conducive to enhancing Hong Kong’s role as an offshore RMB hub.