Hong Kong Considers Bond Issue To Finance Long Term Spending

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

15 September 2003

The government of Hong Kong is considering a bond issue as part of its long term plan to sell off state assets, although it insists that the proceeds would not be used to simply help plug the territory's estimated HK$70 billion budget deficit.

Instead, according to a spokesman for Financial Secretary Henry Tang, the government is planning to use the capital raised from its privatisation programme to finance long term infrastructure investment.

The spokesman revealed that the government is examining a number of options available to it when privatising its assets, including selling these assets directly to investors; a bond issue backed by a specific security; or a convertible bond that investors would exchange for stock in a government company at a later date.

As yet, Tang has not identified which specific government controlled assets could form part of the privatisation plan, although the financial secretary recently started the ball rolling with the announcement of a bond sale in the city's Airport Authority this week.

Furthermore, as the city's largest landlord, the government has significant amounts of potential capital tied up in the territory's real estate, a proportion of which is likely to be sold off in due course.

Recommended