The Hong Kong Financial Services Development Council (FSDC) has suggested that the Hong Kong government should shift towards issuing bonds on a regular basis. The new Executive Director of the FSDC, Dong Yiyue, stated that given the current level of government debt, the authorities could issue more long-term bonds. This would meet the demand for long-term capital while supporting major development projects such as the Northern Metropolis and helping diversify fiscal resources. He emphasized that the government should change its long-standing mindset of not needing to issue debt due to ample fiscal reserves and instead adopt a routine bond issuance strategy.
Regarding the planned inaugural issuance of a 30-year Hong Kong dollar bond in 2025—the longest-tenor HKD bond ever issued by the Hong Kong government, with a size of HKD 1.5 billion—Dong described the scale as merely "a drop in the ocean." He noted that the government should take a leading role in actively promoting the development of the bond market. He added that regular government bond issuance is inherently attractive and does not necessarily need to be linked to infrastructure financing.
By taking the lead in issuing ultra-long-term bonds such as 30-year tenors, the government can help establish a complete and effective yield curve, providing a pricing benchmark for other issuers. This would attract more companies, including innovative technology firms, to conduct bond financing in Hong Kong. Dong likened a robust bond market to a safe harbor, offering a refuge for capital during stock market turbulence and preventing outflows from Hong Kong's capital markets.
He also mentioned that through industry exchanges, it has been understood that patient capital, such as insurance companies and pension funds, has demand for long-term bonds. With investment horizons extending up to 30 years, these investors seek certainty in their investment tools, particularly fixed-income products like long-term bonds, amid the current uncertain global interest rate environment.
Discussing the company re-domiciliation mechanism implemented since last May, which has successfully attracted large insurance companies to establish their headquarters in Hong Kong, Dong pointed out that as treasury managers responsible for managing their substantial balance sheets return to Hong Kong, they gain a deeper understanding of local investment opportunities, including bonds. This proximity advantage helps channel more investments into the Hong Kong market.
The FSDC published a conceptual report last December proposing a series of action plans to consolidate Hong Kong's status as an international financial center, followed by extensive consultations. Dong stated that they have engaged with over 400 senior managers from financial and professional services institutions so far. The goal is to release an updated report by mid-year, offering more specific recommendations, including exploring concrete mechanisms to attract patient capital.