By Julia Fioretti
HONG KONG (Reuters) - Hong Kong is looking to raise between $500 million and $1 billion in five-year green bonds as the former British colony looks to establish itself as a center for green finance.
Hong Kong is marketing a five-year U.S. dollar-denominated green bond on Tuesday, according to a term sheet seen by Reuters. It is targeting a size of between $500 million and $1 billion, according to a message sent to investors.
The proceeds from green bonds get earmarked for investment in environmentally friendly projects.
The indicative guidance on the coupon was U.S. five-year Treasuries plus 50 basis points (bps), the term sheet showed.
Tuesday's bond is the first to be issued under Hong Kong's $100 billion green bond program to fund projects around clean transportation, air quality improvement and green buildings.
Green bonds account for a small portion of the global bond market but are expected to gain in size, particularly in Asia which has lagged other regions like Europe.
Worldwide green bond issuance hit $47.2 billion in the first quarter of this year, according to a report by Moody's earlier this month.
Indonesia was the first Asian country to sell a green bond in 2018, raising $1.25 billion.
Credit Agricole (PA:CAGR) and HSBC are joint global coordinators for Hong Kong's green bond.
The bond is expected to price later on Tuesday, according to the term sheet.