Market Summary

Yield Movements

The yield curve for local currency (LCY) government bonds in Hong Kong, China steepened between 3 November and 6 February. Yields at the shorter-end of the curve declined amid a downward adjustment of the base rate by the Hong Kong Monetary Authority in December. Meanwhile, yields rose at the longer-end of the curve with the reopening of 10-year and 15-year government bonds. The steepening of the curve also reflected market expectations of faster economic growth. Gross domestic product growth edged up to 3.8% year-on-year (y-o-y) in the fourth quarter (Q4) 2025, driven by faster expansion in exports and private consumption.

Local Currency Bond Market Size and Issuance

Hong Kong, China's LCY bond market expanded faster in Q4 2025, supported by a high volume of government bond issuance. LCY bonds outstanding reached HKD3,679.7 billion at the end of December, with growth accelerating to 6.3% quarter-on-quarter (q-o-q) from 4.7% q-o-q in the previous quarter. New issues of LCY bonds in Q4 2025 tallied HKD1,643.7 billion, up 4.0% q-o-q on robust government bond sales, including HKD55.0 billion of Silver Bonds. Meanwhile, corporate bond issuance fell 17.7% q-o-q, dragged down by subdued issuance from real estate firms.

Sustainable Bond Market

Sustained public sector activity continued to bolster Hong Kong, China's sustainable bond market in 2025. The stock of sustainable bonds reached USD46.6 billion at the end of 2025, down 3.1% y-o-y as heightened global uncertainty capped private sector issuance. New issuance from the private sector fell 61.3% y-o-y to USD2.2 billion. Meanwhile, public sector issuance grew 2.0% y-o-y to USD4.0 billion, driven by two landmark government offerings: a USD2.7 billion multicurrency tranche of green bonds in June and a USD1.3 billion multicurrency tranche of digital green bonds in November. The digital issuance was Hong Kong, China's third venture into tokenized green bonds as part of initiatives to promote fintech and develop its sustainable bond market.