Hong Kong, China has one of the most open local currency bond markets in Asia. This is reflected in the large variety of local and offshore issuers who benefit from a sophisticated infrastructure and well-developed market institutions. There is a large investor base and wide acceptance of product types.

Public sector bonds come in the form of Exchange Fund Bills and Notes (EFBNs), which are issued and managed by the Hong Kong Monetary Authority (HKMA). EFBNs provide benchmark yields that guide private debt pricing. Eighty percent of the bonds issued and traded are private sector issuances. Bond trading is mostly through over-the-counter (OTC) markets. However, some bonds are traded on the Securities Market of the Hong Kong Stock Exchanges and Clearing (HKEx), which is the holding company that operates the stock exchange. In addition, three-year Exchange Fund Note (EFN) futures are traded on the HKEx Derivatives Market. Hong Kong, China is the preferred location in Asia for bond issues by foreign and domestic corporations—as well as supranational borrowers—because of its easy access to international debt markets.

A wide range of asset classes are available for securitization. The two main asset classes securitized are i) residential and commercial mortgages, and ii) HKMA claims on central governments and central banks.

HKMA established the Hong Kong Mortgage Corporation (HKMC) and Hong Kong Link 2004 to facilitate securitization of residential mortgages and toll facilities, respectively. To promote the development of the local debt market, authorities have introduced a number of new products, expanded and improved market infrastructure, and provided a tax and regulatory environment conducive to market development.