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HKMC
Bauhinia MBS Limited HK$2,000,000,000 Series 2002-1 Mortgage Backed Securities due April 2023 issued under US$ 3 Billion Mortgage-Backed Securitisation Programme

The Hong Kong Mortgage Corporation ("HKMC") is pleased to announce today (11 March) the successful closing of the debut MBS issue launched under the US$3 Billion multi-currency Mortgage-Backed Securitisation Programme of Bauhinia MBS Limited (the "Programme"). Bauhinia MBS Limited is a bankruptcy-remote special purpose company formed by the HKMC to act as the vehicle for issuance of MBS under the Programme. The event was marked by a signing ceremony held today.

This HK$2 billion Issue (series 2002-1) was well received by the market with a wide range of institutional investors, including insurance companies, pension/investment fund managers, private and commercial banks. It is the largest-ever Hong Kong dollar denominated residential MBS transaction in Hong Kong, and is the first public MBS offering investors the choice between a Prime-based and a HIBOR-based coupon. This issue is lead-managed by Merrill Lynch International, in collaboration with five Co-Lead Managers including Bank of China (Hong Kong), Bank of East Asia, Deutsche Bank, HSBC and JPMorgan and two Co-Managers including International Bank of Asia and Wing Lung Bank.

The Issue is collateralized by a pool of HKMC's high-quality residential mortgages. It is divided into two classes of HIBOR-based and Prime Rate-based of HK$1.2 billion and HK$800 million respectively. Both MBS classes carry the HKMC's guarantee on principal and interest payments. Both classes will be qualified for 20% capital risk weighting and liquefiable assets under the Hong Kong Banking Ordinance. The MBS issue will be cleared through the Central Moneymarkets Unit operated by the Hong Kong Monetary Authority. Merrill Lynch International, Bank of East Asia, Deutsche Bank, HSBC and JPMorgan will act as market makers to quote two-way prices to enhance liquidity of the MBS in the secondary market. A summary of the structure and key terms of the Issue, and characteristics of the underlying mortgage pool are provided in the Annexes.

Mr Tony Latter, Executive Director of the HKMC, said, "I am proud of the pioneering role which the HKMC has been taking in the development of our MBS market. This provides opportunities for banks, wishing to better manage or to offload their mortgage portfolios. It creates a new avenue of investment for fund managers and other investors. It indirectly benefits home-buyers, by prospectively facilitating the supply of mortgage finance. And it contributes generally to the development of the debt market in Hong Kong."

Mr K L Wong, Vice Chairman, Corporate Finance, Asia Pacific Region, Merrill Lynch (Asia Pacific) Limited, said, "the enthusiastic response to this oversubscribed offering has once again demonstrated the strong business model of the Hong Kong Mortgage Corporation, the success of which will have important implications for other Asian countries."

The Hong Kong Mortgage Corporation Limited
11 March 2002

Annex A
Annex B
Annex C

Related Speech:
Welcoming Remarks by Tony Latter (Speech at the Signing Ceremony for Bauhinia MBS Limited HK$2bn Series 2002-1 Mortgage-Backed Securities, 11 March 2002)

Last revision date: 1 August 2011
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