Hong Kong is seeking to strengthen its bond market ecosystem, as issuance of bonds denominated in both Chinese yuan and Hong Kong dollars has picked up significantly.

Analysts expect the bond markets to deepen and expand further this year, attracting interest from a broader mix of issuers and investors.

UBS on Thursday said public bonds denominated in Hong Kong dollars have gained popularity among both investors and issuers, with supply from overseas entities, including supranationals, sovereigns, and agencies, showing a marked increase.

In April, the International Bank for Reconstruction and Development — the World Bank Group’s lending arm — priced a HKD-denominated sustainable development bond. The five-year bond raised HK$8 billion ($1 billion), marking the largest deal in the “wonton bond” market, which refers to public HKD-denominated bonds issued by overseas entities in the Hong Kong Special Administrative Region.

“The development of the HKD public bond market has been evident over the past two years,” said Rainy Lu, head of debt capital markets for Greater China at the investment bank.

A “virtuous circle” is taking shape, Lu added.

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According to the UBS, issuance volume of HKD public bonds has surged more than 200 percent year to date in 2026 compared with the same period last year. The robust activity has been driven largely by the home currency’s ability “to accommodate sizeable issuances at a more attractive cost” compared to the US dollar, euro, and Japanese yen, the bank said.

Earlier in the day, Standard Chartered announced the issuance of its inaugural green wonton bond in an amount of HK$2 billion. This is the first public HKD-denominated green bond to be issued by a financial institution group and the largest HKD issuance for the multinational bank.

The offshore yuan bond market — also known as the dim sum bond market — has also remained active. “We are seeing a more diverse mix of issuers, including those from the technology, media, and telecoms, industrial and consumer sectors, tapping the market,” Lu noted.

In addition to Chinese banks and financial institution issuers, those from outside the world’s second-largest economy have also increased, “thereby attracting greater attention from investors,” she added.

Data compiled by UBS showed that offshore renminbi bond issuance across the Chinese mainland, the HKSAR and the Taiwan region totaled 296 billion yuan ($43.5 billion) in 2025. Year to date in 2026, the issuance volume has grown 30 percent year-on-year compared with the same period last year, according to the bank.

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To further enhance the bond market’s vitality in Hong Kong, the HKSAR government has been stepping up efforts to deepen mutual market access with the mainland.

“We will expedite the launch of mainland government bond futures in Hong Kong, pursue the inclusion of real estate investment trusts in mutual market access, and seek inclusion of the renminbi trading counter under Southbound Stock Connect,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said during a forum on Thursday.

Hui also highlighted the city’s efforts to develop its offshore renminbi business ecosystem, including measures to reduce transaction costs for renminbi and other currency conversions in order to attract more RMB-denominated bond issuance in Hong Kong.

“This is highly relevant at a time when more trade and investment flows are looking for diversification in settlement and financing currency,” he added.

Contact the writer at gabylin@chinadailyhk.com