Hong Kong Sells $1.25 Billion In US Dollar Bonds

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

20 July 2004

The Hong Kong government has sold US$1.25 billion worth of bonds in its first ever global debt sale after investors attempted to buy four times this amount of bonds.

The ten year bonds have been priced to yield 74 basis points more than US Treasury notes, narrower than the government’s initial price of 75-79 basis points above US T-Notes.

As it seeks to diversify its sources of funding, the government of the SAR is hoping to raise US$2.6 billion through the sale of US dollar and local currency denominated bonds.

It also has plans to sell HK$5 billion in Hong Kong dollar-denominated bonds with maturities of five and fifteen years.

Hong Kong’s foreign exchange reserves swelled to over $120 billion in June according to the HK Monetary Authority, representing the fifth largest reserve of foreign currency globally.

The bonds have received favourable ratings from the ratings agencies. Moody’s has rated the US dollar bonds at A1 and the local currency bonds at Aa3 (one notch higher). Meanwhile, Standard & Poor’s rated the US dollar bonds at A+ and the Hong Kong dollar bonds at AA-.

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