Market Summary

Yield Movements

Between 2 June and 29 August, local currency (LCY) government bond yields in Hong Kong, China edged up for most maturities amid interventions by the Hong Kong Monetary Authority to maintain the Hong Kong dollar's peg to the United States dollar. The currency market interventions drained excess funds from the financial system and pushed up borrowing costs.

Local Currency Bond Market Size and Issuance

Outstanding LCY bonds reached HKD3,309.6 billion at the end of June with growth moderating to 2.0% quarter-on-quarter (q-o-q) in the second quarter (Q2) of 2025 from 3.8% q-o-q in the previous quarter due to maturities in government bonds and a slower expansion in corporate bonds. LCY bond issuance rose 3.2% q-o-q to HKD1,446.3 billion, boosted by increased issuance from the public sector. Hong Kong Special Administrative Region government bonds issued in Q2 2025 included a 30-year bond, the longest maturity of HKD-denominated government bonds to date. Issuance growth in the corporate bond segment moderated as economic uncertainty dampened business sentiment.

Sustainable Bond Market

Hong Kong, China's sustainable bonds outstanding reached USD45.9 billion at the end of June and continued to mostly consist of green bonds. The stock of sustainable bonds fell 1.5% q-o-q in Q2 2025 due to the volume of maturities outpacing issuance. Bonds with tenors up to 5 years comprised 67.5% of outstanding securities, resulting in a size-weighted average tenor of 4.7 years. About 81% of outstanding sustainable bonds were denominated in foreign currencies. New issuance in Q2 2025 consisted of green bonds denominated in foreign currencies from the public sector and green bonds denominated in HKD from the private sector.