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HKMC: Launch of HK$20 Billion Retail Bond Issuance Programme and Inaugural Issue under the Programme

The Hong Kong Mortgage Corporation Limited (HKMC) is pleased to announce today (Monday) the launch of its HK$20 billion Retail Bond Issuance Programme (Programme) and the inaugural issue under the Programme that will be placed to investors through 19 Placing Banks.

Under the Programme, the HKMC has appointed 19 banks as Placing Banks to distribute its debt securities to retail investors. They also perform the role of market makers for the bonds to facilitate transactions in the secondary market. This offering mechanism, which was introduced by the HKMC in 2001 on a pilot basis, has proved to be highly effective in marketing bonds to retail investors. So far, 25 issuers have adopted this mechanism and raised over HK$43 billion through some 195 issues of retail bonds and certificate of deposits, including 6 issues by the HKMC that have raised over HK$8.6 billion.

The HKMC has taken the opportunity to introduce some major refinements to the prospectuses to make them more user-friendly and a more effective tool for marketing retail bonds to retail investors. To facilitate investors' understanding of the bonds on offer, a 6-page Issue Prospectus is separated from the Programme Prospectus to set out the key terms of the bonds being offered. In addition, a 1-page extract of the Issue Prospectus will be available as a marketing pamphlet (Annex 1). Both Prospectuses are drafted in plain language and, where appropriate, in a question-and-answer format to facilitate easy reading by investors. The compact size of the documents and the arrangement of updating the Programme Prospectus on an annual basis instead of for every issue, will help significantly to reduce the expenses and time for their preparation.

The HKMC today signed the Programme Agreement and the Placing Bank Agreement with 19 Placing Banks, namely, Bank of America (Asia), Bank of China (Hong Kong), Citibank, CITIC Ka Wah Bank, Bank of Communications, Bank of East Asia, Chiyu Bank; Dah Sing Bank, DBS Bank, Hang Seng Bank; HSBC, ICBC (Asia), International Bank of Asia, Liu Chong Hing Bank, Nanyang Commercial Bank, Shanghai Commercial Bank, Standard Chartered Bank, Wing Hang Bank and Wing Lung Bank. The HKMC has also entered into an Underwriting Agreement with Bank of China (Hong Kong), Bank of East Asia and HSBC for an underwriting amount of HK$600 million in respect of the 4-year notes of the inaugural issue drawn under the Programme.

HKMC retail bonds provide investors with an additional investment product to achieve a balanced investment portfolio, stable interest income and an enhanced return over bank deposits. Key features of the inaugural issue that will bring additional benefits to retail investors are as follows:

(a) Enlarged Placing Bank network: to reach out effectively to retail investors, the number of Placing Banks will be increased from 14 to 19 for this new issue. The Placing Banks have over 860 designated bank branches for handling subscriptions. In addition, retail investors can make use of the phone and/or Internet banking facilities of some Placing Banks to subscribe for the bonds.

(b) Choices on tenor and return: the new issue will be divided into three series to give retail investors choices in bond products for portfolio diversification and return enhancement. The HKMC will launch fixed rate bonds of 2-year maturity, 3-year maturity and 4-year maturity.

(c) Established market making arrangement: the 19 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 efficiently liquidate their holdings. 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 efforts basis afterwards.

The coupons of the three series are as follows.



Coupon per annum
(payable semi-annually)







An investor may subscribe for one or more of the above series. The actual subscription price for each series of the Notes will be determined by reference to the relevant Exchange Fund Notes as specified in the Issue Prospectus. The offering mechanism is explained in the Technical Brief at Annex 2.

The offer period will commence at 9:00 a.m. on 25 May 2004 (Tuesday) and end at 2:00 p.m. on 3 June 2004 (Thursday). 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 offer 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 Programme Prospectus and the Issue Prospectus from the designated branches of the 19 Placing Banks (Annex 4) and the office of the HKMC. Investors may also access the website of the HKMC ( for details of the issue.

Mr Norman Chan, Executive Director of the HKMC, said, " On the back of the excellent track record of the offering mechanism of issuing bonds through Placing Banks, we are confident that the HK$20 billion Retail Bond Issuance Programme will provide an effective platform for the HKMC to tap funds from the retail market. We also hope that the new prospectuses pioneered by the HKMC will set a new standard and useful benchmark for other issuers of retail bonds."

The Hong Kong Mortgage Corporation Limited
24 May 2004


Annex 1 (PDF file, 723KB)
Annex 2 (MS Word file, 73KB)
Annex 3 (MS Word file, 33KB)
Annex 4 (MS Word file, 23KB)

Last revision date: 1 August 2011
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