Appointment of Recognized Dealers, Primary Dealers and Co-arrangers of the Government Bond Programme and the tentative issuance schedule

The Hong Kong Monetary Authority (HKMA) announced today (Monday) that, as representative of the Hong Kong Special Administrative Region Government (HKSAR Government), it has appointed 12 Primary Dealers and 97 Recognized Dealers to assist in taking forward the institutional tranche of the Government Bond Programme (GBP). On behalf of the HKSAR Government, the HKMA also intends to appoint two Co-arrangers to help arrange and manage offerings of Retail Government Bonds under the GBP.

An HKMA spokesperson said that Government Bonds issued under the institutional tranche will be offered through competitive tender. Recognized Dealers may trade Government Bonds through securities accounts which they maintain with the HKMA. To start with, the HKMA has invited the existing Recognized Dealers of the Exchange Fund Bills and Notes Programme to become the Recognized Dealers for the GBP. If other regulated financial institutions wish to apply to become Recognized Dealers for the GBP, they may do so by submitting their business plans to the HKMA for consideration.

Primary Dealers, appointed for a term of two years, will provide two-way bid-and-offer quotations to Recognized Dealers with a view to promoting Government Bond trading in the secondary market. Primary Dealers must underwrite any unsubscribed portion of any issue for the institutional tranche. They may participate in competitive tenders in the primary offer for the institutional tranche. The selection of Primary Dealers was based on the accumulative amounts of Exchange Fund Notes allotted to individual financial institutions in 2007 and 2008. A list of appointed Primary Dealers and Recognized Dealers is at Annex 1.

The HKMA also published today the first tentative issuance schedule for the six months from September 2009 to February 2010 for the institutional tranche of the GBP (Annex 2). Two-year, five-year and ten-year Government Bonds will tentatively be issued under the institutional tranche with a total issue size of HK$8 billion. The two-year Government Bond will be the first to be issued, tentatively scheduled for September 2009. The HKMA will publish a tentative issuance schedule every six months in January and July each year to cover the six-month periods starting in March and September.

For the retail tranche of the GBP, the HKMA will engage market players to act as Co-arrangers and Placing Institutions to offer Retail Government Bonds to retail investors. The HKMA intends to appoint Bank of China (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation Limited as Co-arrangers for a term of two years. The Co-arrangers will provide professional advice on various aspects of the offerings including timing, structure and the appropriate channels for distributing Government Bonds to retail investors through, for example, Placing Institutions.

"The HKSAR Government will take into account the advice of the Co-arrangers and prevailing market conditions in determining the timing for issuing the Retail Government Bonds. Further details will be announced as appropriate," an HKMA spokesperson said.

The primary objective of the Government Bond Programme is to promote the further and sustainable development of the local bond market. The Programme comprises issues for institutional and retail investors respectively. The HKMA is tasked, among others things, with co-ordinating the offering of Government Bonds under the Programme.

For further enquiries, please contact:
Peggy Lo, Manager (Communications), at 2878 1687 or
Hing-fung Wong, Manager (Communications), at 2878 1802

Hong Kong Monetary Authority
3 August 2009