On May 4, 2021, the Hong Kong Monetary Authority (HKMA) released the details of its Green and Sustainable Finance Grant Scheme (GSF Grant Scheme), which will consolidate Hong Kong’s existing Pilot Bond Grant Scheme and Green Bond Grant Scheme into one new program. According to the Chief Executive of the HKMA, Mr. Eddie Yue:
“The global green bond market has grown from practically non-existent ten years ago to US$270 billion in 2020. In Hong Kong, we have taken early and proactive steps to strengthen Hong Kong’s position as a regional green and sustainable finance hub, including the issuance of two rounds of Government green bonds since 2019 and the establishment of the Green and Sustainable Finance Cross-Agency Steering Group to coordinate cross-agency market development efforts. The launch of a new [GSF] Grant Scheme to support green and sustainable bond issuance and lending will further enrich the green and sustainable finance ecosystem in Hong Kong.”
Continue reading for more details on the GSF Grant Scheme.
The GSF Grant Scheme will subsidize costs for eligible bond issuers and loan borrowers in two areas:
- General Bond Issuance Costs: The GSF Grant Scheme will subsidize expenses incurred by first-time green and sustainable bond issuers, including arrangement, legal, audit and listing fees. The scheme will subsidize half the eligible expenses, up to a maximum of HK$2.5 million where the bond, its issuer or its guarantor is rated by a credit rating agency recognized by the HKMA (or HK$1.5 million in the absence of such a rating).
- External Review Costs: The GSF Grant Scheme will subsidize transaction-related external review fees for eligible first-time and repeat green and sustainable bond issuers and loan borrowers, including the costs of pre-issuance review and post-issuance review and reporting. The scheme will subsidize the full cost of eligible expenses, up to a maximum of HK$800,000 per bond issuance or loan.
The GSF Grant Scheme will commence May 10, 2021 and last for three years. Going forward, the HKMA may update or adjust the details of the GSF Grant Scheme as needed.
For more information on Hong Kong’s ambitious green and sustainable finance goals, see our article, “A Cross-Agency Strategic Plan for Green and Sustainable Finance in Hong Kong: Insights and Implications for Market Participants“, hosted by Hong Kong Lawyer here.