The Hong Kong Special Administrative Region government may widen the ambit of profit tax exemption in the region to include the non-renminbi sovereign bonds issued by the central government, Paul Chan Mo-po, the city's financial secretary, said.

He made the statement during an investor meeting for the Chinese mainland's planned $2 billion sovereign bond issue in the city on Wednesday.

The Ministry of Finance will issue $1 billion worth of five-year sovereign bonds and $1 billion worth of 10-year sovereign bonds in Hong Kong on Oct 26, carrying a fixed interest rate.

Currently, investors are exempted from the payment of profits tax in respect of profits arising from renminbi sovereign bonds issued by the central government in the city.

"The issuance of non-renminbi sovereign bonds will further promote capital flows between Hong Kong and the mainland, increasing the variety of bond products and promoting the development of the Hong Kong bond market. We will complete the legislative work regarding the scope extension of profits tax exemption as soon as possible to transform Hong Kong into a favored platform for the issuance of sovereign bonds," Chan said.

The bond issue has already evoked great interest among investors. Wang Yi, a director from China's Finance Ministry, said that the interest from the investors is justifiable as the central government debt has a healthy structure, dominated by longer tenor obligations, bond financings, local currency debt and held within domestic bond investors.

"Domestic investors will not undersell bonds for liquidity, they are long-term investors, so China's government bonds have high stability," he said, adding that Chinese government debt-to-GDP ratio remains at a relatively low level compared to international peers.

Since the mainland has ample foreign exchange reserves, Wang pointed out, raising US dollar funds is not the main purpose of the sovereign bond issue. The net proceeds from the bonds will be used for general governmental purposes.

He said the debt issuance can help internationalize the country's financial system, set a pricing benchmark for foreign-currency-denominated bonds, help international investors better understand the economy, and balance the structure of external debt.

By the end of 2016, the combined debt of the central and local governments in China stood at 27.33 trillion yuan ($3.96 trillion), with the debt-to-GDP ratio at around 36.7 percent.