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Press Releases

KCRC Launches HK$10 Billion Note Issuance Programme

The Kowloon-Canton Railway Corporation (KCRC) today launched a HK$10 billion Note Issuance Programme to finance West Rail, Phase I and other new railway projects.

Speaking at today's signing ceremony, KCRC Chairman and Chief Executive Mr K Y Yeung said: "It is an inaugural funding programme for the Corporation's new railway projects, and one which marks the emergence of KCRC in the marketplace as a significant borrower."

The Programme is arranged by the Hong Kong Monetary Authority (HKMA) with Bermuda Trust (Far East) Limited as the trustee.

Mr Yeung said KCRC had received from the Government $29 billion equity contribution for West Rail, Phase I. This provided a strong equity base in support of the Corporation's external borrowings.

"We estimate that some HK$25 billion of debt will need to be raised between now and 2003. This is a daunting task for the Corporation, as we are a first-time borrower in the world's capital markets.

"Despite the fact that drawdown will not take place until 2001, we are taking no chances. So we have started making preparations for raising the required capital a year and a half ahead of drawdown. This HK$10 billion Note Issuance Programme is part of that initiative," he said.

Mr Yeung said long term, fixed rate Hong Kong dollar funding remained a rare commodity in the domestic market.

"I therefore hope that this Programme would contribute, in time, toward the development of such a market in Hong Kong for the benefit of borrowers and investors alike," he said.

Mr Yeung also noted that in the years ahead KCRC would be transformed from a relatively small suburban mass-transit carrier into a territory-wide multi-modal railway operator serving a much larger population catchment.

Upon the completion of West Rail, Phase I in 2003 and the planned extensions of East Rail to Tsim Sha Tsui, Ma On Shan and Lok Ma Chau in 2004, the net asset value of KCRC would increase by six times from $14.6 billion in 1997 to $96 billion in 2004, he said.

Speaking on the same occasion, HKMA Chief Executive Mr Joseph Yam said: "The KCRC has already built up a reputation as a quality borrower and I am confident that through this Programme, it will be able to borrow Hong Kong dollar funds on fine terms as has already been the case with the Mass Transit Railway Corporation, the Airport Authority and the Hong Kong Mortgage Corporation."

Mr Yam said: "The debt paper to be issued by the KCRC under this Programme will be covered by the proven market making arrangements that we initially designed for our Exchange Fund paper."

He said the Programme served two important objectives.

"The first is to promote the continuing development of our debt market through the introduction of high quality borrowers. The second is to assist public sector entities in borrowing Hong Kong dollar funds cost-effectively, and in a way that correctly reflects their credit-worthiness," he said.

Under the Programme, KCRC may from time to time issue fixed rate or floating rate Hong Kong dollar notes with maturities of up to 10 years. The notes will be offered on a tender basis through HKMA in its capacity as the arranger of the programme to Recognised Dealers appointed by it.

 

Hong Kong Monetary Authority

22 April 1999

Last revision date: 1 August 2011
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