Joerg Hiller
Aug 06, 2026 09:19
HKMA announces tender of HK$1.5B 1-year HONIA-indexed floating rate notes under Infrastructure Bond Programme, set for Aug. 12, 2026.
The Hong Kong Monetary Authority (HKMA) announced the tender of HK$1.5 billion in 1-year HONIA-indexed Floating Rate Notes, scheduled for Wednesday, August 12, 2026. These bonds, issued under the Infrastructure Bond Programme, will settle on August 13 and mature on August 13, 2027, carrying interest pegged to the Hong Kong Dollar Overnight Index Average (HONIA).
HONIA serves as Hong Kong’s alternative reference rate, offering a near risk-free benchmark derived from actual overnight interbank lending transactions. Comparatively, the more widely recognized HIBOR (Hong Kong Interbank Offered Rate) is a forward-looking term rate based on quoted bank funding costs. While both benchmarks coexist, HONIA has increasingly gained traction as a reference rate for floating-rate instruments, including government bonds like the one-year notes offered in this tender.
The tender will be open exclusively to Primary Dealers under the Infrastructure Bond Programme. Bids must be submitted in increments of HK$50,000 through these dealers. Results will be published by 3:00 p.m. on the tender day via the HKMA website, the Hong Kong Government Bonds website, Bloomberg, and Refinitiv. The issue price is set at par, with interest payments scheduled quarterly in arrears.
Recent HONIA data, as of July 24, 2026, shows a compounded 30-day average rate of 2.50595%. This rate will influence the interest payable on the notes, which will be indexed to the sum of the compounded HONIA average and the highest accepted spread at tender. Notably, the rate is subject to a minimum of 0% per period.
The proceeds from the notes will be allocated to infrastructure projects under the Infrastructure Bond Framework, furthering Hong Kong’s development goals. Trading on the Stock Exchange of Hong Kong is expected to commence on August 14, 2026.
This marks the latest in a series of HONIA-based issuances by the HKMA, with a similar offering conducted in May 2026. These efforts underscore the growing institutional adoption of HONIA, which has been a cornerstone of the city’s transition toward transaction-based reference rates. However, HIBOR remains widely used in mortgage and loan pricing, with 73.8% of new HKD mortgage loans in May 2026 still tied to HIBOR.
Market participants will be watching the tender closely as it will provide insight into demand for HONIA-linked instruments amid broader interest rate dynamics. Given HONIA’s status as a near risk-free rate, the spread on these notes could serve as a proxy for institutional appetite and risk sentiment in Hong Kong’s debt markets.
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