Hong Kong is seeking more sovereign borrowers for its dim sum bond market as this week's APEC Finance Ministerial Meeting offers an opportunity to demonstrate the city's financial-market advantages. Analysts said lower fundraising costs relative to developed markets and risk diversification could attract sovereign borrowers, including many APEC members. Dim sum bonds are yuan-denominated bonds issued outside mainland China.
Marcus Yin, assistant vice-president of Moody's sovereign risk group, said elevated US interest rates have increased dollar borrowing costs. Yin said those costs make alternative currencies, including offshore renminbi, more attractive to issuers such as sovereign governments. FTSE Russell put the yield to maturity for dim sum bonds at 2.01% as of late September. The US Treasury Department put the yield to maturity for US Treasury bonds at roughly 5.1% as of mid-October.
Finance ministers from APEC's 21 member economies are expected to address debt issues and mounting pressure from rising sovereign borrowing costs this week. APEC's member economies account for 62% of global GDP. Hong Kong Financial Secretary Paul Chan Mo-po highlighted the city's unique role in debt financing for developing economies in a blog on Sunday. Chan could increase lobbying during the ministerial talks. Yin said Hong Kong, the world's largest offshore renminbi centre, offers liquidity, settlement systems, market-making capacity and a specialised investor base that few competing centres can match.
China's Ministry of Finance issued a record 68 billion yuan (US$10.2 billion) in treasury bonds in Hong Kong in 2025. The ministry is expected to issue 84 billion yuan this year. Indonesia's government issued its inaugural dim sum bonds in Hong Kong in 2025, totalling 6 billion yuan.
Dim sum bond issuance is a key component of the Hong Kong government's five-year plan. Yin said Hong Kong vowed to expand the supply of high-quality yuan-denominated assets and increase offshore yuan circulation. HKEX data showed Hong Kong's dim sum bond issuance reached 266.9 billion yuan as of late September, up 13.8% year-on-year. Outstanding dim sum bonds total close to 1.9 trillion yuan, making Hong Kong the world's largest market.
Agnes Tsang, a partner at law firm A&O Shearman, said the Southbound Bond Connect scheme allows mainland institutional investors to invest in dim sum bonds. The scheme launched in 2021. Tsang said the scheme adds access to a growing pool of mainland institutional investors alongside international demand.
Hong Kong also offers bonds in various currencies and digital green bonds that might attract APEC members. Malaysia, an APEC member, has listed sukuk, also called Islamic bonds, in Hong Kong. Malaysia's most recent listing totalled US$1.5 billion in July this year.
Hong Kong broke global records last month by issuing around HK$20 billion (US$2.55 billion) in digital green bonds in four currencies in September. The issuance was Hong Kong's fourth in a series since 2023. Digital green bonds are digitally native debt securities that finance environmentally sustainable projects.
Tsang has advised the government since Hong Kong's first digital green bond issuance. Tsang highlighted Hong Kong's work to integrate different forms of digital money, including tokenised central bank money and tokenised deposits, into primary issuance settlement. Tsang said that work could position Hong Kong as a leading venue for sovereigns considering their first digital green bonds.
Hong Kong Expands Dim Sum Bond Market to Attract Sovereign Borrowers
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Summary
Hong Kong is pushing to attract sovereign borrowers to its dim sum bond market, using the APEC Finance Ministerial Meeting to highlight its competitive edge. The risk-to-reward ratio for issuers could improve with lower costs and better diversification, analysts say. Dim sum bond issuance hit 266.9 billion yuan by late September, with nearly 1.9 trillion yuan outstanding. The city also launched HK$20 billion in digital green bonds, aligning with shifting market trends toward sustainable finance.
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