Linklaters acted as the legal adviser to the lead managers on Zhuhai Huafa Group Co., Ltd.’s successful issuance of RMB 1.4bn 4.5% digitally native bonds (DNBs) due 2027. This transaction marks the first public offering of DNBs by a Chinese state-owned enterprise. The DNBs were dual-listed on The Stock Exchange of Hong Kong Limited (HKEX) and the Chongwa (Macao) Financial Asset Exchange Co., Ltd. (MOX).

The DNBs were issued in a dematerialised registered form and cleared through the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority. The DNBs and the beneficial interests were created and recorded on HSBC’s Orion* digital asset platform. This transaction also marks the first issuance of bonds on the platform with a tenure of more than one year.

The Linklaters team was led by capital markets partner Michael Ng, with support from counsel Grace Wee and solicitor Xiaoming Zhong. A separate team, led by counsel Beibei Ding, acted as legal adviser to the fiscal agent.

Linklaters’ capital markets partner Michael Ng commented:

“We are delighted to have witnessed and contributed to the growing trend of digitally native bonds in Hong Kong. We look forward to continuing to contribute to the advancement of the digitalisation of the financial market and collaborating closely with clients across China and in the region on their finance innovation.”

Linklaters is at the forefront of advising on many ground-breaking digital securities issuances in Asia and globally. In Hong Kong SAR, drawing on the unique experience and insights from the wider Linklaters network, the team has advised on many landmark deals in the digital bond space, including advising on the first tokenised bond governed by Hong Kong law and the world’s first multi-currency digital green bond by HKSAR Government, the first digitally native notes listed on HKEX by a HKSAR corporate by HSBC, the first cross-border tokenised financing transaction for Ant Digital Technologies, and the inaugural issuance of digitally native securities on the new D-FMI DLT platform developed by Euroclear Bank by the World Bank.

*HSBC Orion refers to the distributed ledger technology (DLT) platform deployed by HSBC to CMU as the DLT platform operator for the purposes of, among other things, creating and settling the DNBs.