HONG KONG - Hong Kong is looking to raise between $500 million and $1 billion in five-year green bonds as the former British colony looks to establish itself as a centre for green finance.

Hong Kong is marketing a five-year U.S. dollar-denominated green bond on Tuesday, according to a term sheet seen by Reuters. It is targeting a size of between $500 million and $1 billion, according to a message sent to investors.

The proceeds from green bonds get earmarked for investment in environmentally friendly projects.

The indicative guidance on the coupon was U.S. five-year Treasuries plus 50 basis points (bps), the term sheet showed.

Tuesday's bond is the first to be issued under Hong Kong's HK$100 billion ($12.74 billion) green bond programme to fund projects around clean transportation, air quality improvement and green buildings.

Green bonds account for a small portion of the global bond market but are expected to gain in size, particularly in Asia which has lagged other regions like Europe.

Worldwide green bond issuance hit $47.2 billion in the first quarter of this year, according to a report by Moody's earlier this month. urn:newsml:reuters.com:*:nL5N22L3S3

Indonesia was the first Asian country to sell a green bond in 2018, raising $1.25 billion. urn:newsml:reuters.com:*:nL4N1QC5QK

Credit Agricole and HSBC are joint global coordinators for Hong Kong's green bond.

The bond is expected to price later on Tuesday, according to the term sheet.

($1 = 7.8490 Hong Kong dollars)

(Reporting by Julia Fioretti Editing by Shri Navaratnam) ((julia.fioretti@thomsonreuters.com; +852 2912 6686; Reuters Messaging: julia.fioretti.thomsonreuters.com@reuters.net))