The Hong Kong Mortgage Corporation Limited ("HKMC") is pleased to announce today (Monday) the launch of a new issue of retail bonds that will be placed to investors through an enlarged group of Placing Banks. The HKMC signed the Placing Bank Agreement with Bank of China, Bank of Communications, CITIC Ka Wah Bank, Dao Heng Bank, HSBC, Hang Seng Bank, Standard Chartered Bank and Wing Lung Bank at the signing ceremony held this afternoon.
The debut issue launched in October 2001 under the new offering mechanism was met with enthusiastic response by retail investors. A record amount of HK$651 million was placed through Dao Heng Bank, HSBC and Hang Seng Bank. A further HK$14 million of the reserved amount has been tapped by the Placing Banks to meet investor demand in the secondary market.
The new issue will adopt the same offering mechanism as the previous issue (see technical brief at Annex 1). It will also contain the following new features that will bring additional benefits to retail investors:
(a) Enlarged Placing Bank network: in order to reach out to more retail investors, the number of Placing Banks has been increased from 3 to 8. The number of designated bank branches for processing applications will also be increased by two times from 106 to 308 branches. In addition, retail investors can make use of the phone and/or Internet banking facilities of Bank of China, Dao Heng Bank, HSBC and Hang Seng Bank to subscribe for the retail bonds.
(b) More choices on tenor and return: the new issue will be divided into three tranches of 2-year, 3-year and 5-year maturity (the last issue offered two tranches of 3-year and 5-year maturity). An investor may subscribe for one or more of the tranches. This provides more choices for retail investors to suit their investment objectives; and
(c) Enhanced market making arrangement: the eight Placing Banks are committed to quoting firm bid prices for the retail bonds during business hours until the maturity date. This will ensure that retail investors can liquidate their holdings at any time. In order to enhance the ability of the Placing Banks to quote offer prices, the amount to be held in reserve for tapping by these banks to meet the demand of retail investors in the secondary market will be increased from 20% to 30% of the total issue amount. The placing banks are 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 issue will be divided into three tranches and their respective tenor and coupon are as follows:
|
Tenor
|
Coupon per annum
|
|
2-year
|
3.00%
|
|
3-year
|
4.00%
|
|
5-year
|
4.75%
|
The actual subscription price will be determined by reference to the relevant Exchange Fund Notes as specified in the Prospectus.
The subscription period will commence on 22 January 2002 and end at 12:00 noon on 30 January 2002. The timetable for the issue is set out in Annex 2. As applicants need to have a bank account and an investment account with the placing banks they intend to instruct, they are encouraged to submit their applications early and not to wait until the closing date of the subscription 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 retail bonds can obtain the prospectus from the offices of the HKMC and the 308 designated branches of the 8 Placing Banks (see Annex 3), and the HKMC's website at www.hkmc.com.hk.
Mr. Peter Pang, Chief Executive Officer of the HKMC, said, "the new issue is a clear demonstration of the HKMC's strong commitment to develop the retail bond market. The significant increase in the number of Placing Banks and designated branches for processing applications will enable the HKMC to reach out more effectively to retail investors. The wider selection on bond tenor and yields also offer investor more choices to meet their investment objectives. By not setting a cap on the size of the issue, the HKMC intends to accommodate in full the demand of retail investors."
Hong Kong Mortgage Corporation
21 January 2002
