Hong Kong plots HONIA-linked floater debut

According to an article published on 17 September 2020 on Risk.net, the HKMA is considering issuing government debt linked to the local market’s alternative reference rate, the Hong Kong dollar overnight index average (HONIA), with the expectation that the issuance will help spur corporate issuance of similar notes, and help promote the development of the HONIA market. Although there are no plans to discontinue publication of the Hong Kong market’s primary interest rate benchmark, the Hong Kong Interbank Offered Rate or HIBOR, the authorities are keen to encourage greater use of HONIA.

In July 2020, the Hong Kong Exchanges and Clearing Limited’s OTC Clearing Hong Kong Limited became the first central counterparty to clear a HONIA swap – a trade between Bank of China (Hong Kong) and HSBC. However, the article reported that there have been no floating rate note issuances linked to HONIA to date.

In August 2020, Singapore became the first country to issue central bank debt linked to a risk-free rate. The Monetary Authority of Singapore has claimed that the floating rate notes have already had the desired effect of building momentum behind the move to Singapore’s alternative risk-free rate, the Singapore Overnight Rate Average.

The article is accessible here (registration required): link.