PRC local governments raise RMB16.5 billion in offshore RMB bonds in Hong Kong

The RMB7.5bn multi-tranche bond issued by the People’s Government of Guangdong Province comprises: 

• RMB2.6bn 1.42% bonds due 2029 (the 2029 Bonds)
• RMB3.5bn 1.52% bonds due 2031 (the 2031 Bonds)
• RMB1.4bn 1.82% bonds due 2036 (the 2036 Bonds) 

This issuance marks the third consecutive year that Guangdong has issued offshore RMB local government bonds in Hong Kong, following its inaugural issue in 2024. Net proceeds from this year’s issuance will fund major strategic platform projects in Guangzhou’s Nansha District, green and blue projects under Guangdong’s Green and Blue Finance Framework, and major water conservancy projects. 

This repeat issuance will provide funding support from international investors and offshore capital for major infrastructure projects, further deepening regional financial market connectivity and promoting high-quality development across the Guangdong-Hong Kong-Macao Greater Bay Area.

The RMB4bn multi-tranche bond issued by the Shenzhen Municipal People’s Government comprises:

• RMB2.5bn 1.51% bonds due 2031 (the 2031 Bonds)
• RMB1.5bn 1.81% bonds due 2036 (the 2036 Bonds)

This is Shenzhen’s sixth consecutive year of offshore RMB bond issuance in Hong Kong since its debut in 2021. The 2031 Bonds are issued as low-carbon city themed green bonds, with net proceeds to finance eligible green projects in accordance with Shenzhen’s Green, Blue, Social and Sustainability Finance Framework. Net proceeds from the 2036 Bonds will be used for governmental purposes.

The repeat issuance deepens financial cooperation between Shenzhen and Hong Kong, supports Hong Kong’s role as a global hub for offshore renminbi.

The RMB5bn multi-tranche bond issued by the People's Government of Hainan Province comprises:

• RMB2.5bn 1.41% bonds due 2029 (the 2029 Bonds)
• RMB1.5bn 1.51% bonds due 2031 (the 2031 Bonds)
• RMB1bn 1.81% bonds due 2036 (the 2036 Bonds)

This marks Hainan’s first offshore RMB bond since the launch of island-wide special customs operations in the Hainan Free Trade Port (FTP), and its fifth consecutive issuance in Hong Kong since 2022. Under Hainan’s Green, Social, Blue and Sustainability Bonds Framework, the 2029 Bonds are issued as sustainability bonds financing green and social projects, and the 2031 Bonds are issued as blue bonds financing blue projects. Notably, the 2036 Bonds are education-themed bonds—China’s first local government bonds to fund educational initiatives, specifically the Hainan Lingshui Li’an International Education Innovation Pilot Zone.

The bonds are settled through the Hainan FTP’s EF Account system (EF account). The Hong Kong Monetary Authority has added the bonds to its list of eligible collateral for the RMB liquidity facility, and interest and income from bond disposals are exempt from Hong Kong profits tax. The issuance represents a significant initiative for the Hainan FTP to attract global capital to the province’s priority industries and projects, while strengthening links between the FTP and Hong Kong’s offshore RMB market.

All three offerings drew robust demand from global institutional investors, across multiple countries and regions submitting orders. Types of investors included policy banks, commercial banks, insurance companies, funds, private banks, and asset managers. These issuances highlight sustained demand from onshore and offshore investors for high-quality RMB bond assets, further strengthening Hong Kong’s role as a global hub for offshore renminbi.

The A&O Shearman deal team across all three issuances was led by partner Agnes Tsang, with support from senior associate Jiayin Yu, and associates Eileen Qu and Michael Leung.