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Press Releases

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

The Hong Kong Mortgage Corporation Limited (HKMC) is pleased to announce today (Monday) the launch of a new retail bond issue with four series of notes (the "Issue") under the HK$20 Billion Retail Bond Issuance Programme (the "Programme").

The coupons of the four series of notes are as follows:

Currency Tenor Coupon
(payable semi-annually)
HKD 1-year 3.00%
HKD 3-year 3.50%
USD 1-year 3.10%
USD 1-year extendable for 1 year and further extendable for 1 year 3.10% for first year
3.50% for second year
4.00% for third year

The HKMC today signed an agreement with the two Underwriting Banks, namely, The Hongkong and Shanghai Banking Corporation Limited and Bank of China (Hong Kong) Limited for an underwriting amount of HK$300 million in respect of the 3-year Hong Kong dollar note of the Issue.

Under the Programme, the HKMC has appointed 17 banks from the Dealer Group of the Programme as Placing Banks to distribute the Issue to retail investors. The 17 Placing Banks are Bank of America (Asia), Bank of China (Hong Kong) Limited, CITIC Ka Wah Bank, Bank of Communications, Bank of East Asia, Chiyu Bank, Dah Sing Bank, DBS Bank, Hang Seng Bank, The Hongkong and Shanghai Banking Corporation Limited, Fubon Bank (Hong Kong), Liu Chong Hing Bank, Nanyang Commercial Bank, Shanghai Commercial Bank, Standard Chartered Bank (Hong Kong) Limited, Wing Hang Bank and Wing Lung Bank.

The Placing Banks will also perform the role of market makers for the Issue to facilitate transactions in the secondary market. This offering mechanism through Placing Banks was first introduced by the HKMC in 2001 and has proven highly effective in marketing bonds to retail investors. So far, the HKMC has issued seven retail bond issues totaling HK$10.4 billion.

HKMC retail bonds provide investors with an additional investment product to achieve a balanced investment portfolio and stable interest income. The Issue, with the terms and conditions highlighted in Annex A, will bring the following additional benefits to retail investors:

(a) Wide distribution network to reach out effectively to retail investors: the 17 Placing Banks have over 850 designated bank branches for handling subscriptions. In addition, retail investors can subscribe for the notes by telephone or Internet banking facilities provided by certain Placing Banks.

(b) Variety in currency, tenor and return to provide investment choices to retail investors: the Issue comprises four series of notes, allowing retail investors a choice of currency and tenor for portfolio diversification. The HKMC will launch two series of Hong Kong dollar fixed rate notes of 1-year maturity and 3-year maturity as well as two series of US dollar fixed rate notes of 1-year maturity and 1-year extendable up to 3-year maturity. It is the first-ever US dollar notes launched by the HKMC.

(c) Established market making arrangement to facilitate transactions in the secondary market: the 17 Placing Banks have committed to quoting firm bid prices for the notes during business hours until the maturity dates of the notes. This will ensure that retail investors can liquidate their holdings in the secondary market. To facilitate the Placing Banks to quote their offer prices, the HKMC reserves an additional issue amount of 30% on the issued amount for further draw down by the Placing Banks at any time during the life of the notes. The Placing Banks have also committed to quoting firm offer prices until the reserve amount is fully drawn down and will continue to do so on a best effort basis.

Investors may subscribe for one or more of the above series of notes. The actual subscription price for each of the two Hong Kong dollar notes will be determined by reference to the corresponding Exchange Fund Bill and Note as specified in the Issue Prospectus. Each of the two US dollar notes will be offered at a price of 100.

The offer period will commence at 9:00 a.m. on 19 July 2005 (Tuesday) and end at 2:00 p.m. on 26 July 2005 (Tuesday). The timetable for the issue is set out in Annex B. As applicants need to have a bank account and an investment account with any one of the Placing Banks whom 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 can obtain the Programme Prospectus and the Issue Prospectus from any of the designated branches of the 17 Placing Banks (Annex C) or the office of the HKMC. Investors may also access the website of the HKMC (www.hkmc.com.hk) for details of the Issue.

"The success of HKMC's debt issues has been attributable to HKMC's high credit ratings, which are the same as those of the Hong Kong SAR Government, and to the wide range of notes that can meet the different investment needs of retail investors," said Mr Peter Pang, Executive Director of the HKMC. "This move by the HKMC to issue US dollar denominated bonds will help to promote the development of a safe and efficient financial infrastructure for Hong Kong, based on a multi-currency, multi-dimensional platform."

Mr James H. Lau Jr., Chief Executive Officer of the HKMC, said, "The HKMC will continue to devote resources to improve its debt issuance programme. A mature retail bond market helps the HKMC to broaden its funding sources and also improve investment opportunities for investors."

The Hong Kong Mortgage Corporation Limited
18 July 2005

Annex A (MS Word, 59KB)
Annex B (MS Word, 39KB)
Annex C (MS Word, 23KB)

Last revision date: 1 August 2011
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