Macao Legal Landscape | Introduction to Macao's Legal System (Part 5) - Why Choose Macao for Issuing Offshore Renminbi Bonds

The cultivation of Macao's bond market began in 2019 when the Ministry of Finance first issued RMB 2 billion in government bonds in Macao. This landmark event directly spurred the development of infrastructure such as the Central Securities Depository System (CSD). MCSD In 2021, the establishment of Macao Central Securities Depository and Clearing Corporation Limited (MCSD) marked the market's entry into a phase of standardized development. By 2023, revisions to the "Legal System of the Financial System" shifted bond issuance from an approval system to a registration system, significantly boosting market vitality. That year, offshore RMB bond issuance surged by 120% year-on-year, accounting for 80% of the total bond market issuance in Macao.

The cultivation of Macao's bond market began in 2019 when the Ministry of Finance issued RMB 2 billion treasury bond in Macao for the first time. This landmark event directly promoted the construction of infrastructure such as the Central Securities Depository System (CSD). In 2021, the establishment of Macao Central Securities Depository and Clearing Corporation Limited (MCSD) marked the market entering a stage of standardized development. By 2023, the revision of the "Legal System of the Financial System" will change the approval system for bond issuance to a registration system, completely unleashing market vitality. That year, the issuance of offshore RMB bonds surged by 120% year-on-year, accounting for 80% of the total issuance in the Macau bond market.

As a key hub for financial cooperation between China and Portuguese-speaking countries, Macao's offshore RMB bond market has seen rapid growth in recent years, driven by both policy support and infrastructure improvements. Lotus Debt Since the issuance of the first "Lotus Bond" in 2018, the market has continued to expand. As of November 2024, the volume of offshore RMB bonds registered and managed by China (Macao) Financial Assets Trading Co., Ltd. (MOX) has surpassed RMB 300 billion, accounting for over 40% of Macao's total bond market. Strategically positioned to "connect with the mainland and the world," the market is developing a unique model through institutional innovation and cross-border collaboration.

The offshore RMB bond market in Macao, as a key hub for financial cooperation between China and Portuguese speaking countries, has rapidly developed in recent years under the dual promotion of policy support and infrastructure optimization. Since the issuance of the first "Lotus Bond" in 2018, the market size has continued to expand. As of November 2024, the scale of offshore RMB bonds registered and managed by China (Macao) Financial Assets Trading Co., Ltd. (MOX) has exceeded RMB 300 billion, accounting for over 40% of the total bond market in Macao. The market is strategically positioned as "connecting with the mainland and the world", gradually building a unique development model through institutional innovation and cross-border cooperation.

The core advantages of issuing offshore RMB bonds in Macao are multi-faceted and mutually reinforcing. Article 16 of the 2023 "Financial System Legal System" establishes a registration system for bond issuance, eliminating the need for approval from the Chief Executive. Issuers only need to submit a prospectus, compliance certificate, and other documents to the MCSD. The review period is shortened to 2-4 weeks, significantly faster than the 6-8 weeks in Hong Kong. Attractive tax incentives are also a major draw. The 2023 budget exempts bond interest and trading income from supplementary income tax (12%) and stamp duty (0.1%), offering a significant cost advantage over Hong Kong's 16.5% profits tax. Businesses in the Hengqin Guangdong-Macao Deep Cooperation Zone receive an additional 2% subsidy on bond issuance fees. Supplementary Income Tax Robust financial infrastructure ensures efficient market operations. MCSD, as the core infrastructure, supports a multi-tiered account system compatible with mainland China's oversight requirements. In 2024, Industrial and Commercial Bank of China (Macao) issued a US$250 million bond, leveraging the interconnection between CSD and the Hong Kong Central Clearing and Settlement System (CMU) to achieve "T+1" cross-border settlement. MOX, as the trading platform, provides comprehensive services for bond issuance, listing, and trading. Daily trading volume reached RMB 1.2 billion in 2024, a 300% increase from 2021. A dual listing partnership with the Luxembourg Stock Exchange allows issuers access to the European market.

The core advantages of issuing offshore RMB bonds in Macao are also reflected in multiple dimensions, and a mutually supportive synergistic effect is formed among these advantages. Article 16 of the Financial System Legal System, which will be implemented in 2023, stipulates that bond issuance will adopt a registration system, without the need for approval from the Chief Executive. Only the prospectus, compliance certificate and other documents need to be submitted to MCSD, and the review cycle will be shortened to 2-4 weeks, which significantly improves the efficiency compared to similar approval processes in Hong Kong (about 6-8 weeks); Tax incentives are particularly attractive. According to the 2023 fiscal year budget, bond interest and transaction income are exempt from supplementary income tax (tax rate of 12%) and stamp duty (0.1%), forming a significant cost advantage compared to Hong Kong (profits tax of 16.5%). Enterprises in the Hengqin Guangdong Macao Deep Cooperation Zone can also enjoy an additional 2% subsidy on bond issuance fees. The improvement of financial infrastructure provides guarantees for the efficient operation of the market. MCSD, as the core infrastructure, supports a multi-level account model and is compatible with mainland penetrating regulatory requirements. When ICBC Macao issues a $250 million bond in 2024, cross-border settlement "T+1" will be achieved through the interconnection between CSD and the Hong Kong Central Depository and Clearing System (CMU); MOX, as a trading platform, provides full chain services for bond issuance, listing, and trading. The daily trading volume will reach 1.2 billion yuan in 2024, an increase of 300% compared to 2021. It has also reached a dual listing cooperation with the Luxembourg Stock Exchange, and issuers can simultaneously log in to the European market.

The diversification of the investor structure has further enhanced market attractiveness. As of 2024, monetary authorities such as the People's Bank of China and the Macao Monetary Authority held over 50 billion yuan of offshore RMB bonds in Macao, accounting for 16% of the total market; in 2025, the Ministry of Finance's issuance of 6 billion yuan of government bonds attracted subscriptions of 36.5 billion yuan, with Southeast Asian investors accounting for 35%, Portuguese-speaking country institutional investors accounting for 12%, and Hong Kong investors accounting for 40% of the US dollar bonds issued by ICBC Macau in 2025. The synergistic policy effect facilitates cross-border financing. After registration under the "Management Measures for the Review and Registration of Medium- and Long-Term External Debt of Enterprises," enterprises can flexibly allocate funds through the macro-prudential management policy for full-coverage cross-border financing. For example, in 2024, a state-owned enterprise in Xinjiang issued 380 million yuan of lotus bonds, taking only 45 days from application to fund receipt; there is also special support in the green finance sector, with the 500 million yuan green finance bond issued by Zhuhai Rural Commercial Bank in 2023 receiving priority pledge eligibility under the Macao Monetary Authority's Special Liquidity Support Tool (LST).

The diversification of the investor structure has further enhanced the market attraction. By 2024, the People's Bank of China, the Macao Monetary Authority and other monetary authorities hold more than 50 billion yuan of offshore RMB bonds in Macao, accounting for 16% of the total market; In 2025, the issuance of 6 billion yuan of treasury bond by the Ministry of Finance attracted 36.5 billion yuan of subscription, of which 35% were Southeast Asian investors, 12% were Portuguese speaking countries' institutional investors, and 40% were Hong Kong investors in the US dollar bonds issued by ICBC Macao in 2025. The policy synergy effect provides convenience for cross-border financing. After registering in accordance with the "Management Measures for the Review and Registration of Medium- and Long term External Debt of Enterprises", enterprises can flexibly allocate funds through the macro prudential management policy of full caliber cross-border financing. For example, in 2024, a state-owned enterprise in Xinjiang issued 380 million yuan of lotus flower bonds, and it only took 45 days from application to fund receipt; There is more special support in the field of green finance. The 500 million yuan green finance bond issued by Zhuhai Rural Commercial Bank in 2023 has obtained the priority pledge qualification of the Macao Monetary Authority's Special Liquidity Support Tool (LST).

The process of issuing offshore RMB bonds involves multiple stages, which are closely interconnected and must strictly comply with market norms.

The process of issuing offshore RMB bonds involves multiple stages, which are closely interconnected and must strictly comply with market norms.

The early preparation stage requires forming an underwriting syndicate (including lead and co-lead underwriters), hiring lawyers and accountants, and completing financial audits. This process typically takes 4-6 weeks and requires close collaboration between the issuer, investment banks, and intermediaries.

In the early preparation stage, it is necessary to form an underwriting team (including lead banks and joint banks), hire lawyers and accountants, and complete financial audits. This process usually takes 4-6 weeks and requires close cooperation between the issuer, investment banks, and intermediaries.

The registration application stage requires submitting a prospectus, compliance certificate, rating report, and other documents to MCSD. The review period is 2-3 weeks, with joint participation from MCSD and the Macao Monetary Authority.

The registration application stage requires submission of prospectus, compliance certificate, rating report and other documents to MCSD, with a review cycle of 2-3 weeks, jointly participated by MCSD and the Macao Monetary Authority.

The market roadshow focuses on Hong Kong, Macau, Southeast Asia, and Portuguese-speaking countries, attracting investor interest through promotional activities, which takes about 1-2 weeks.

The market roadshow will focus on regions such as Hong Kong, Macao, Southeast Asia, and Portuguese speaking countries, attracting investors' attention through promotional activities, which will take about 1-2 weeks.

The pricing and issuance phase determines the coupon rate through book-building. Coupon rate The entire process takes about one week.

During the pricing and issuance phase, the coupon rate is determined through bookkeeping and filing, and an underwriting agreement is signed. The entire process takes about one week.

The final stage is listing and trading, submitting a listing application to MOX and completing CSD registration, which takes one week.

The final stage is the listing and trading phase, which involves submitting a listing application to MOX and completing CSD registration, taking only one week to complete.

In key operations, compliance review is crucial, requiring adherence to information disclosure requirements in Macau's "Guidelines for the Administration of Corporate Bond Issuance and Transaction Transfer," including quarterly financial reports and timely disclosure of major events. Green bonds also require evaluation by third-party certification bodies (such as CICERO). Cross-border fund management must follow relevant policies; raised funds can be directly invested in domestic projects (subject to NDRC filing requirements), utilize enterprise cross-border financing macro-prudential quotas, or freely transfer funds through the Hengqin Guangdong-Macao Deep Cooperation Zone FT account. For risk hedging, issuers can use offshore RMB forward contracts to lock in future foreign exchange costs or convert RMB liabilities into USD liabilities through currency swaps, as used by ICBC Macau's 2025 USD bond issuance.

In key operations, compliance review is particularly important and must comply with the information disclosure requirements in Macau's "Guidelines for the Administration of Corporate Bond Issuance and Transaction Transfer", including quarterly financial reports, timely disclosure of major issues, etc. If green bonds are involved, they must also be evaluated by third-party certification agencies (such as CICERO). Cross border fund management must comply with relevant policies, and raised funds can be directly invested for domestic project construction (subject to the requirements of the National Development and Reform Commission), occupy the macro prudential limit of enterprise cross-border financing, or freely transfer funds through the Hengqin Guangdong Macao Deep Cooperation Zone FT account. In terms of risk hedging, issuers can lock in future foreign exchange costs through offshore RMB forward contracts, or convert RMB liabilities into USD liabilities through currency swaps, such as the USD bonds issued by ICBC Macao in 2025, which adopt this structure.

The legal framework and regulatory requirements for offshore RMB bond issuance in Macao are well-established, aiming to ensure the standardized operation of the market and protect investor rights and interests.

The legal framework and regulatory requirements for offshore RMB bond issuance in Macao are well-established, aiming to ensure the standardized operation of the market and the rights and interests of investors.

Key legal bases include the 2023 revised "Financial System Legal System," which clarifies that bonds are issued under a registration system, eliminating rigid financial requirements for issuers and strengthening information disclosure obligations. The "Guidelines for the Administration of Corporate Bond Issuance and Transaction Transfer" detail the issuer's disclosure requirements in the prospectus, including basic bond terms (maturity, interest rate, redemption rights, etc.), issuer financial status (three years of audited reports), risk factors (market, credit, and liquidity risks), repayment plans, and safeguards (such as credit enhancement arrangements and repayment funds).

The core legal basis includes the revised "Financial System Legal System" in 2023, which clarifies that bond issuance adopts a registration system, eliminates the mandatory financial indicator requirements for issuers, and strengthens information disclosure obligations. The Guidelines for the Administration of Issuance, Trading and Transfer of Corporate Bonds stipulate in detail that issuers are required to disclose the basic terms of the bonds (term, interest rate, redemption rights, etc.), the financial condition of the issuer (audit reports for the past three years), risk factors (market risk, credit risk, liquidity risk), and debt repayment plans and safeguard measures (such as credit enhancement arrangements and debt repayment funds) in the prospectus.

In terms of foreign exchange management, according to the "Management Measures for the Examination and Registration of Medium and Long term External Debt of Enterprises", the issuance of bonds with a maturity of more than one year must be registered with the State Administration of Foreign Exchange, and the return of funds must comply with the cross-border RMB settlement policy. The regulatory cooperation mechanism reflects multi-party collaboration. The Macao Monetary Authority (AMCM) is responsible for the registration review and market behavior supervision of bond issuance, with a focus on verifying the authenticity and completeness of information disclosure; Among the mainland regulators, the National Development and Reform Commission approves bond issuance projects involving fixed assets investment, the People's Bank of China monitors cross-border capital flows through the RMB Cross border Payment System (CIPS), and the CSRC conducts compliance reviews on bond issuance activities involving mainland listed companies; Macao and Hong Kong have also signed a Memorandum of Understanding on Bond Market Regulation Cooperation, establishing a joint investigation mechanism for cross-border violations. The investor protection mechanism is implemented through the trustee system, and the issuer needs to hire qualified trustees (such as Bank of China International) to supervise the compliance of the bond during its term and regularly release reports to investors; Bond contracts usually stipulate that Macao law shall be the governing law, and disputes shall be submitted to the courts of the Macao Special Administrative Region for resolution. Disputes involving mainland investors may be handled through the Guangdong Hong Kong Macao Greater Bay Area judicial assistance mechanism. CIPS ）监测资金跨境流动，证监会对涉及内地上市公司的发债行为进行合规审查；澳门与香港还签署了《债券市场监管合作备忘录》，建立跨境违规行为联合调查机制。投资者保护机制则通过受托管理人制度实现，发行人需聘请符合资质的受托管理人（如中银国际），负责监督债券存续期内的合规情况，定期向投资者发布报告；债券合约通常约定以澳门法律为管辖法律，争议提交澳门特别行政区法院解决，涉及内地投资者的纠纷可通过粤港澳大湾区司法协助机制处理。

In terms of foreign exchange management, according to the "Management Measures for the Examination and Registration of Medium and Long term External Debt of Enterprises", the issuance of bonds with a maturity of more than one year must be registered with the State Administration of Foreign Exchange, and the return of funds must comply with the cross-border RMB settlement policy. The regulatory cooperation mechanism reflects multi-party collaboration. The Macao Monetary Authority (AMCM) is responsible for the registration review and market behavior supervision of bond issuance, with a focus on verifying the authenticity and completeness of information disclosure; Among the mainland regulators, the National Development and Reform Commission approves bond issuance projects involving fixed assets investment, the People's Bank of China monitors cross-border capital flows through the RMB Cross border Payment System (CIPS), and the CSRC conducts compliance reviews on bond issuance activities involving mainland listed companies; Macao and Hong Kong have also signed a Memorandum of Understanding on Bond Market Regulation Cooperation, establishing a joint investigation mechanism for cross-border violations. The investor protection mechanism is implemented through the trustee system, and the issuer needs to hire qualified trustees (such as Bank of China International) to supervise the compliance of the bond during its term and regularly release reports to investors; Bond contracts usually stipulate that Macao law shall be the governing law, and disputes shall be submitted to the courts of the Macao Special Administrative Region for resolution. Disputes involving mainland investors may be handled through the Guangdong Hong Kong Macao Greater Bay Area judicial assistance mechanism.

Despite the rapid development of the Macao bond market, it still faces three challenges: firstly, insufficient investor diversity, with international long-term funds accounting for less than 20%; Secondly, the secondary market is weak, with an average daily trading volume of less than 1% of the issuance scale; Thirdly, there is a certain gap in legal connection, and there is a lack of rules for handling cross-border breaches.

Despite the rapid development of the Macao bond market, it still faces three challenges: firstly, insufficient investor diversity, with international long-term funds accounting for less than 20%; Secondly, the secondary market is weak, with an average daily trading volume of less than 1% of the issuance scale; Thirdly, there is a certain gap in legal connection, and there is a lack of rules for handling cross-border breaches.

For policy optimization suggestions, the author believes that the tax exemption policy for bond interest should be extended until 2030, an additional 10% interest subsidy should be given to green bonds, a unified information disclosure standard for the Guangdong Hong Kong Macao Greater Bay Area Bond Market Supervision Joint Conference should be established, and a master's program in "Bond Market and Cross border Finance" should be established in cooperation with the University of Macao to cultivate professional talents.

For policy optimization suggestions, the author believes that the tax exemption policy for bond interest should be extended until 2030, an additional 10% interest subsidy should be given to green bonds, a unified information disclosure standard for the Guangdong Hong Kong Macao Greater Bay Area Bond Market Supervision Joint Conference should be established, and a master's program in "Bond Market and Cross border Finance" should be established in cooperation with the University of Macao to cultivate professional talents.

For enterprises, it is necessary to grasp the policy window, fully utilize the subsidies of Hengqin Guangdong Macao Deep Cooperation Zone, Macao tax incentives, and cross-border financing facilitation policies to reduce comprehensive costs, flexibly choose diversified financing structures such as "RMB bonds+foreign exchange derivatives" and "public+private equity", and convey ESG performance and long-term development potential to international investors through roadshows, white paper releases, and other means.

For enterprises, it is necessary to grasp the policy window, fully utilize the subsidies of Hengqin Guangdong Macao Deep Cooperation Zone, Macao tax incentives, and cross-border financing facilitation policies to reduce comprehensive costs, flexibly choose diversified financing structures such as "RMB bonds+foreign exchange derivatives" and "public+private equity", and convey ESG performance and long-term development potential to international investors through roadshows, white paper releases, and other means.

The rise of Macao's offshore RMB bond market is not only a financial mission entrusted by the central government to "One Country, Two Systems", but also a product of the surge in global demand for RMB asset allocation. With the consolidation of the normalized treasury bond issuance mechanism, the promotion of the "Shenhe Bond" corporate financing paradigm, and the strengthening of the functions of the Sino Portuguese financial service platform, Macao is expected to build an offshore RMB bond hub with an annual issuance scale of more than 100 billion yuan within five years. For issuers, leveraging the institutional dividends and cost advantages of Macao not only enables efficient access to offshore funds, but also embeds them into the financial infrastructure network under the national dual circulation strategy, sharing the historical opportunity of deepening the internationalization of RMB.

The rise of Macao's offshore RMB bond market is not only a financial mission entrusted by the central government to "One Country, Two Systems", but also a product of the surge in global demand for RMB asset allocation. With the consolidation of the normalized treasury bond issuance mechanism, the promotion of the "Shenhe Bond" corporate financing paradigm, and the strengthening of the functions of the Sino Portuguese financial service platform, Macao is expected to build an offshore RMB bond hub with an annual issuance scale of more than 100 billion yuan within five years. For issuers, leveraging the institutional dividends and cost advantages of Macao not only enables efficient access to offshore funds, but also embeds them into the financial infrastructure network under the national dual circulation strategy, sharing the historical opportunity of deepening the internationalization of RMB.