Hong Kong Dollar Bond Market Booms After Record-Breaking Year, Analysts Forecast Further Growth
Issuance hits HK$331 billion as lower local rates and global diversification drive demand for HKD-denominated debt
Issuance of bonds denominated in Hong Kong dollar (HKD) soared to a record HK$331 billion (about US$42.6 billion) so far this year — nearly 37 percent more than the entire 2024 volume, as easing local rates and global demand converge to fuel a surge in HKD-denominated financing.
Market participants and analysts say the momentum is likely to carry into 2026 and beyond.
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Financial institutions such as Hong Kong Mortgage Corporation (HKMC) contributed to the boom: its latest public benchmark bond issuance — totalling HK$25.3 billion (US$3.3 billion equivalent) — marked the largest-ever single offering by the firm, including the biggest 30-year HKD bond tranche in the city’s history.
The deep order-book and broad investor participation underscore growing confidence in Hong Kong’s local-currency market.
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Analysts cite several structural factors behind the surge.
With interest rates on U.S. dollar borrowing remaining elevated, issuers have turned to HKD as a more cost-effective alternative.
At the same time, Hong Kong’s long-standing USD peg, combined with a deep, liquid bond market and a clear regulatory framework, has made HKD bonds an attractive diversification option for Asian and global investors.
One senior banker described the HKD bond market as a “logical choice” for borrowers with natural HKD funding needs or balance-sheet alignment.
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Macroeconomic conditions have also helped.
Lower local interbank rates — driven by a dip in liquidity costs — have enabled issuers to tap the debt market at more favourable yields.
Meanwhile, demand for long-dated bonds appears strong, driven by both institutional investors and pension funds seeking stable income streams and currency-hedged assets.
The recent wave of issuance includes a growing share of social and infrastructure bonds, reflecting investors’ appetite for yield and stable cash flow over extended horizons.
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Looking ahead, many market watchers expect the HKD bond market to continue expanding.
The combination of favourable financing costs, regulatory clarity, and increased demand for currency-diversified debt suggests that Hong Kong is likely to consolidate its role as a major international bond-issuance hub.
As companies and public institutions increasingly tap HKD funding, the market could further mature and deepen — offering an alternative to dollar-denominated debt in a shifting global financial landscape.
Market participants and analysts say the momentum is likely to carry into 2026 and beyond.
([turn0search0])
Financial institutions such as Hong Kong Mortgage Corporation (HKMC) contributed to the boom: its latest public benchmark bond issuance — totalling HK$25.3 billion (US$3.3 billion equivalent) — marked the largest-ever single offering by the firm, including the biggest 30-year HKD bond tranche in the city’s history.
The deep order-book and broad investor participation underscore growing confidence in Hong Kong’s local-currency market.
([turn0search2])
Analysts cite several structural factors behind the surge.
With interest rates on U.S. dollar borrowing remaining elevated, issuers have turned to HKD as a more cost-effective alternative.
At the same time, Hong Kong’s long-standing USD peg, combined with a deep, liquid bond market and a clear regulatory framework, has made HKD bonds an attractive diversification option for Asian and global investors.
One senior banker described the HKD bond market as a “logical choice” for borrowers with natural HKD funding needs or balance-sheet alignment.
([turn0search0], [turn0search5])
Macroeconomic conditions have also helped.
Lower local interbank rates — driven by a dip in liquidity costs — have enabled issuers to tap the debt market at more favourable yields.
Meanwhile, demand for long-dated bonds appears strong, driven by both institutional investors and pension funds seeking stable income streams and currency-hedged assets.
The recent wave of issuance includes a growing share of social and infrastructure bonds, reflecting investors’ appetite for yield and stable cash flow over extended horizons.
([turn0search2], [turn0search5])
Looking ahead, many market watchers expect the HKD bond market to continue expanding.
The combination of favourable financing costs, regulatory clarity, and increased demand for currency-diversified debt suggests that Hong Kong is likely to consolidate its role as a major international bond-issuance hub.
As companies and public institutions increasingly tap HKD funding, the market could further mature and deepen — offering an alternative to dollar-denominated debt in a shifting global financial landscape.
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