Doubt Cast On Timing Of Hong Kong Bond Issue

by Mary Swire, Tax-News.com, Hong Kong

14 June 2004

Doubts were cast last week over whether Hong Kong’s HK$20 billion (US$2.57 billion) bond issue will go ahead as planned next month, amid speculation that the US Federal Reserve may raise interest rates.

According to the government, the debt issue is to be a one-off measure with the proceeds earmarked for the public works budget. However, Secretary for Financial Services Frederick Ma has raised concerns that a US interest rate decision on June 29 could scupper the government’s plans to launch the bond issue in mid-July.

“The government bond issue may be delayed but the final decision will also depend on market sentiment at that time and whether legal procedures can be finalized in time,” Ma was reported as announcing by the Hong Kong Standard.

He added that the government is keen to see the bond offering go ahead on schedule next month before much of the financial sector departs for their summer holidays.

Meanwhile, Financial Secretary Henry Tang has stated that the government has factored in a US rate rise and has no plans to postpone the issue.

The debt offering comes soon after the Hong Kong Link 2004 bond issue, which is backed by the revenue from government-owned bridges and tunnels, and was more than two times oversubscribed.

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