Project Gongcheng 2026 Bond Pricing Meeting of People's Government of Hainan Province, People's Republic of China. (Source: Hainan Daily)

Hainan finalized the bookbuilding and pricing for its 2026 offshore RMB local government bonds in Hong Kong on September 16, issuing CNY 5 billion in bonds. This marks Hainan's first offshore RMB bond since the launch of island-wide special customs operations in the Hainan Free Trade Port (FTP), and the fifth consecutive issuance in Hong Kong.

Funds raised through their sale will primarily support marine ecological conservation, healthcare infrastructure, and key projects in the Lingshui Li'an International Education Innovation Pilot Zone. Bond proceeds will continue to be settled via the Hainan FTP's EF Account.

The offering is split across three tranches: a three-year sustainable development bond at 1.41% (CNY 2.5 billion issued); a five-year blue bond at 1.51% (CNY 1.5 billion issued); and a 10-year education-themed bond at 1.81% (CNY 1 billion issued). All will be listed on HKEX (Hong Kong Exchanges and Clearing Limited).

2026 Global Investor Conference of People's Government of Hainan Province of the People's Republic of China on September 15. (Source: Hainan Daily)

Before the issuance, a roadshow brought together 59 institutional investors from eight countries and regions across Asia and Europe, including banks, securities firms, insurers, and asset managers. Peak order volume hit CNY 43.7 billion, surpassing last year's figure and about nine times the actual issuance amount.

For Hainan, the bonds connect it not only to Hong Kong's capital market but also to various tangible development projects. The funds raised will mainly be allocated to the aforementioned sectors. Specifically, international funds will be channeled through Hong Kong into areas such as ecological preservation, public services, and international education in Hainan.

The 10-year education-themed bond is China's first local government-issued bond to fund educational initiatives, specifically the development of the Lingshui Li'an International Education Innovation Pilot Zone. As Hainan expands its international education efforts, this new bond offers international investors another opportunity to explore the province's education sector and talent development initiatives.

The issuance underscores the growing financial links between Hong Kong's offshore RMB market and the Hainan FTP. The Hong Kong Monetary Authority has added these bonds to its list of eligible collateral for the RMB liquidity facility. Interest and income from bond disposals are exempt from Hong Kong profits tax, and the proceeds will still be settled via the Hainan FTP's EF Account system.