Hong Kong Bond Issue Oversubscribed By Two To One

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

06 May 2004

The Hong Kong government indicated on Tuesday that investors in the government’s first securitised bond issue will receive at least one bond each, despite its being heavily over-subscribed.

The $6 billion bond issue, which is backed by the revenue from government-owned bridges and tunnels, was more than two times oversubscribed, and was described by Financial Secretary Henry Tang as a “landmark transaction for Hong Kong”.

“This clearly signifies the potential breadth of the investor base for high quality Hong Kong dollar debt instruments,” announced Tang at the signing ceremony on Tuesday.

“I hope this transaction will serve as a stimulus to attract more private sector and non-government entities to consider launching their own structured or plain debt products in Hong Kong and to our retail investors. This will help to consolidate our position as an international financial centre,” he added.

The minimum investment in the issue was set at $51,000, which was open to both institutional and retail investors. The $2.47 billion offered to retail investors has been split into three tranches with three, five and seven years maturity.

Tang was keen to emphasise in his speech that he is committed to maintaining “strict fiscal discipline”, and added that the proceeds from this and the upcoming $20 billion Government Bond offering will not be used to support the government’s own expenditure.

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