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Press Releases

Retail Exchange Fund Notes Programme

The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) the issue of a 2-year Exchange Fund Notes (EFNs) for retail investors, the first under a refined Retail Exchange Fund Notes Programme.

The Retail Exchange Fund Notes Programme was first launched in August 2003 to help promote the development of the retail bond market in Hong Kong. After reviewing the experience in the programme, the HKMA has decided to continue offering EFNs to retail investors and to introduce the following refinements to improve its attractiveness:

  1. the retail EFNs will be allotted to successful non-competitive bids at the lowest price, i.e. the highest yield, accepted at the competitive-bid tenders. Previously, retail EFNs were allotted at the average accepted price;
  2. the distribution network will be strengthened, with the number of retail EFN distributors increasing to seven, from the previous three distributors; and
  3. there will be more flexible selection of EFN issues for offer to retail investors, taking account of market conditions and the advice of distributors. Initially, one issue will be selected for offer to retail investors in each quarter.

"Exchange Fund Notes are a safe, liquid and highly transparent instrument. They provide a steady stream of income that is usually higher than the interest on bank deposits," Mr Joseph Yam, Chief Executive of the HKMA said. "We believe that retail investors will welcome this additional channel of investment, particularly with the refinements that have been made to the issuing, pricing and distribution arrangements," he added.

The first retail EFN issue for offer under the refined scheme is a 2-year issue (EFN 2705) to be issued on 17 May 2005. Up to HK$300 million of the issue (which has a total issue size of HK$1,200 million) will be on offer for non-competitive tender under the retail programme. Each tender must be for an amount of HK$50,000 or integral multiples thereof. The Notes will mature on 17 May 2007 and will carry interest at the rate of 2.6% per annum payable semi-annually in arrears.

Investors wishing to participate in the non-competitive tender may apply for the issue between 4 May 2005 and 11 May 2005 (cut-off time at 2 pm) through the retail EFN distributors appointed by the HKMA, which include the Bank of China (HK) Limited, Hongkong and Shanghai Banking Corporation Limited, Hang Seng Bank Limited, Standard Chartered Bank (HK) Limited, Bank of East Asia Limited, DBS Bank (HK) Limited and Wing Lung Bank Limited.

The subscription price of the issue will be fixed and announced on 13 May 2005. Allotment will be made on 17 May 2005.

Further information on the scheme and the EFNs can be found at "Exchange Fund Notes: Information for investors" on the HKMA website (http://www.hkma.gov.hk).

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Kevin Ip, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
3 May 2005

Annex

Last revision date: 1 August 2011
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