Speech at the Signing Ceremony for HK$1 Billion Mortgage-Backed Securities Issue drawn under US$3 Billion Mortgage-Backed Securitisation Programme Bauhinia MBS Limited

Good afternoon, ladies and gentlemen,

Let me welcome all of you to today's signing ceremony for the HK$1 billion mortgage-backed securities (MBS) originated by the Hong Kong Mortgage Corporation under the Bauhinia Mortgage-Backed Securitisation Programme.

The Hong Kong Mortgage Corporation has been issuing MBS in Hong Kong regularly since 1999. Including this issue, there have been nine series of MBS for a total amount of over HK$11 billion, and we are honoured to be the largest corporate issuer of asset-backed securities (ABS) in Hong Kong.

HKMC's pioneering efforts have acted as a catalyst for the development of securitisation activities in Hong Kong. Since the debut MBS issue by the HKMC in 1999, Hong Kong has seen more Hong Kong-dollar securitisation issues backed by financial assets such as car loans, credit card receivables and commercial property loans. This has also paved the way for the first-ever ABS issue launched by the Government in 2004 backed by tunnel and bridge tolls.

The HKMC has helped to deepen the local securitisation market through the introduction of innovative MBS structures and promoting reform of debt-issuance regulations and procedures. Through standardisation of mortgage documentation, the Corporation has also facilitated the securitisation process by removing the need for due diligence review of documentation by credit rating agencies and investors.

The development of the ABS market in Hong Kong produces yet another win-win situation for issuers and investors. Through ABS, banks and corporations can raise funds efficiently from the capital markets while managing their risk exposures on their balance sheets more effectively. Investors have a wider choice of investment instruments with different risk-return profiles.

This is the fifth issue under the Bauhinia MBS Programme. We are happy to see both old and new friends joining the management group for the issue. We are also very pleased to learn that a diversified group of investors including retirement funds, investment funds and other institutional investors have shown a keen interest in the issue.

I would like to thank HSBC, the sole arranger and lead manager, for their efforts and professional work to make this issue a great success. I would also like to thank the three Co-lead Managers, Bank of China (Hong Kong), Bank of Communications and DZ Bank, and the Co-managers ABN AMRO Bank and National Australia Bank.

I look forward to your continuing support of our Corporation and its debt issues. Thank you.