Speech at the Signing Ceremony with the American Express Bank for the Guaranteed Mortgage Backed Securitisation Programme of The Hong Kong Mortgage Corporation Limited
Speeches
20 Dec 1999
Speech at the Signing Ceremony with the American Express Bank for the Guaranteed Mortgage Backed Securitisation Programme of The Hong Kong Mortgage Corporation Limited
Peter Pang, Chief Executive Officer, The Hong Kong Mortgage Corporation Limited
- It is a great pleasure to welcome you all to this Signing
Ceremony. We are very pleased to have the American Express Bank as
our partner to launch this HK$ 630 million MBS issue.
- It is no coincidence that American Express Bank is the first
international bank to participate in our MBS Programme. Through
active co-operation in the past two years, the Mortgage Corporation
and the American Express Bank have forged a strong relationship as
business partners. We both pride ourselves as product innovators,
and adopt an innovative and proactive approach in promoting new
products in the Hong Kong mortgage market, offering wider choices
to consumers. Our co-operation in this MBS issue will certainly
help to promote the development of the secondary mortgage market in
Hong Kong.
- The back-to-back structure of the current MBS programme offers
significant benefits to banks in Hong Kong. It allows them to keep
a substantial portion of the cashflow from mortgages while reducing
the credit risk and capital cost and substantially improving the
quality of their mortgage assets. It also provides them the option
of off-loading any time a part of or the whole issue to suit their
liquidity management or trading objectives.
- Over time, a deep and liquid MBS market is essential for the
healthy development of the secondary mortgage market in Hong Kong.
In this regard, we are glad to learn that Dao Heng Bank, the
investor of our inaugural MBS issue, and American Express Bank both
intend to sell part of their MBS portfolio to help create market
liquidity for the two issues. There are already encouraging signs
of potential investors expressing interest in investing in these
high quality securities.
- The Mortgage Corporation is committed to developing a liquid
market for the MBS issued under our Programme. As a major step
forward, we have appointed four financial institutions - Dao Heng
Bank, Deutsche Bank, JP Morgan & Co and Merrill Lynch (Asia
Pacific) Limited - as market makers. The quoting of bid and offer
prices by these major players will firmly establish a secondary
market for our mortgage backed securities. The Mortgage Corporation
will also take active steps to improve investors' knowledge of the
structure and terms of the MBS issued under our Programme. This
will help to encourage more widespread investor participation in
the MBS market.
- The MBS issue concluded today with the American Express Bank
serves to further confirm the positive reception of our MBS
Programme by the banking community. We intend to arrange regular
MBS issues under the Programme, which is important in building
liquidity for the secondary market. The Corporation plans to
arrange HK$3 to 4 billion of back-to-back MBS next year. If market
conditions permit, we will also explore the development of MBS
products that target directly the end-investors. I am confident
that the greater standardisation of the structure and documentation
of MBS products through our MBS programmes will be beneficial to
the long-term development of the secondary mortgage market in Hong
Kong.
- Thank you.