The Hong Kong Mortgage Corporation Limited (HKMC) is pleased to announce today (Monday) the launch of a new issue of retail bonds that will be placed to investors through 12 Placing Banks.
The HKMC signed the Placing Bank Agreement with Bank of China (Hong Kong), Bank of Communications, Bank of East Asia, Chiyu Bank, DBS Bank, Hongkong and Shanghai Banking Corporation, Hang Seng Bank, ICBC (Asia), International Bank of Asia, Nanyang Commercial Bank, Shanghai Commercial Bank and Wing Lung Bank at the signing ceremony held this afternoon. The HKMC also entered into an Underwriting Agreement with HSBC for an amount of HK$600 million in respect of the 7-year notes of the issue.
The issuing mechanism through placing banks introduced by the HKMC in October 2001 has proved to be highly effective in placing bonds to retail investors. So far, the HKMC has issued HK$6.1 billion of retail bonds to around 15,000 investors. 24 banks and companies have raised over HK$37 billion through issuance of retail bonds and retail certificates of deposit in the same period.
This new issue will adopt the same offering mechanism (see Technical Brief at Annex 1). Key features of the issue that will bring additional benefits to retail investors are as follows:
(a) More choices on tenor and return: to give retail investors more choices in bond products for portfolio diversification and return enhancement, the new issue will be divided into four tranches. The HKMC will introduce its first 7-year retail bonds in addition to fixed rate bonds of 2-year maturity, 3-year maturity and a 3-year extendable for 2-year note (see Annex 2 for details).
(b) Flexible investment amount: to provide more flexibility in the investment amount, retail investors may choose to invest in each tranche of the new issue a minimum amount of HK$50,000 or a higher amount in integral multiples of HK$10,000 instead of HK$50,000.
(c) Extensive Placing Bank network: to reach out effectively to retail investors, the 12 Placing Banks have designated 525 bank branches for handling subscription. In addition, retail investors can make use of the phone and/or Internet banking facilities of some Placing Banks to subscribe for the bonds.
(d) Established market making arrangement: the 12 Placing Banks have committed to quoting firm bid prices for the retail bonds during business hours until the maturity dates of the bonds. This will ensure that retail investors can liquidate their holdings at any time. To facilitate the Placing Banks to quote offer prices, the amount to be available to support secondary market making activities is 30% of the initial issued amount. The Placing Banks have also committed to quoting firm offer prices until the reserve amount is exhausted and will continue to do so on a best effort basis afterwards.
The coupons of the four tranches are as follows.
|
Tenor
|
Coupon per annum
(payable semi-annually)
|
|
2-year
|
1.75%
|
|
3-year
|
2.50%
|
|
3-year extendable for 2-year note
|
3.25%
|
|
7-year
|
4.25%
|
An investor may subscribe for one or more of the above tranches. The actual subscription price for each tranche of the Notes will be determined by reference to the relevant Exchange Fund Notes as specified in the Prospectus.
The subscription period will commence at 9:00 a.m. on 25 November 2003 (Tuesday) and end at 2:00 p.m. on 2 December 2003 (Tuesday). The timetable for the issue is set out in Annex 3. As applicants need to have a bank account and an investment account with any one of the Placing Banks they intend to instruct, they are encouraged to submit applications early and not to wait until the closing date of the subscription period. The subscription money will only be deducted from the applicant's account on the closing date.
Retail investors who are interested in subscribing for the bonds can obtain the prospectus from the designated branches of the 12 Placing Banks (see Annex 4) and the office of the HKMC. Investors may access the website of the HKMC (www.hkmc.com.hk) for details of the issue.
Mr Norman Chan, Executive Director of the HKMC, said, "The HKMC has devoted substantial resources to promoting its debt securities to retail investors. This commitment serves the multiple objectives of broadening the Corporation's investor base, providing the general public with an additional and relatively safe investment choice, and developing the bond market in Hong Kong."
The Hong Kong Mortgage Corporation Limited
24 November 2003
Annex 1 (MS Word, 61KB)
Annex 2 (MS Word, 42KB)
Annex 3 (MS Word, 31KB)
Annex 4 (MS Word, 20KB)
