Peter Pang: Hong Kong Mortgage Corporation retail bond issue
Opening remarks by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority and
Executive Director of the Hong Kong Mortgage Corporation Limited, at the Signing Ceremony for the
Retail Bond Issue under the HKMC's Retail Bond Issuance Programme, Hong Kong, 5 March 2007.
* * *
Good afternoon ladies and gentlemen,
On behalf of the Hong Kong Mortgage Corporation, I welcome you all to this signing ceremony for the
new retail bond to be offered to the public tomorrow.
This is a particularly significant occasion for the HKMC as we are just two days into the tenth
anniversary of the establishment of the Corporation on 3 March 1997. Last year, the Board of
Directors commissioned a comprehensive review of the Corporation's business strategy. The review
concluded that the HKMC will continue to play a crucial role in providing liquidity to banks, helping
people to own their own homes, and promoting the development of the local debt market. The HKMC
will continue to focus on these important missions and augment that with a prudent overseas
expansion with a view to replicating its successful operations in the region.
As far as debt market development is concerned, on the retail front, the HKMC has so far issued nine
retail bonds totalling about HK$12 billion. The bonds have been well received as they provide the
general public an additional, safe investment choice.
In fact, today's issue is the first retail bond issue since Moody's upgraded the HKMC's rating in
October last year - Aaa for domestic currency debt and Aa1 for foreign currency debt. The top credit
rating puts the Corporation in a very strong position to play a more active and strategic role in
promoting the development of the debt and securitisation markets in Hong Kong.
Today, apart from issuing two-year notes in Hong Kong Dollar and in US Dollar, we are launching
HIBOR-linked notes and 6-year US Dollar zero coupon bonds under the HKMC Retail Bond
Programme as part of our product innovation efforts.
The HIBOR-linked notes are principal-protected instruments with returns related to the movement of
the HIBOR. These notes are quite popular among the professional and private banking markets, and
we are making them available to retail investors as well. The notes cater mainly for investors who can
accept higher interest rate volatility in return for a higher investment yield. With the fast development of
wealth management services and investor education, the more sophisticated retail investors may
choose to invest in this tranche for yield enhancement and portfolio diversification.
The HKMC is also bringing the first 6-year US Dollar zero coupon bond to the retail bond market,
following the successful issue of the debut 10-year Hong Kong Dollar zero coupon bond in September
last year. The six-year tenor presents opportunities for investors who prefer medium-term savings for
children's education or future retirement.
Apart from these two new initiatives, the HKMC is also issuing 2-year retail bonds denominated in
Hong Kong Dollars and in US Dollars for investors who prefer safety and certainty.
I believe the four tranches of retail bonds we are offering today will meet the needs of a wide range of
investors. I trust that the HKMC's steadfast efforts to promote development of the retail bond market
will create yet another win-win situation for the investors, the placing banks and the Corporation.
Lastly, I would like to thank the banking community for their strong support. In particular, Bank of
China (Hong Kong), HSBC and Standard Chartered Bank (Hong Kong) are co-underwriting a portion
of the bond issue as well as placing the notes. I would also like to thank the other 14 placing banks,
namely, Bank of Communications, Bank of East Asia, China Construction Bank (Asia), Chiyu Bank,
Chong Hing Bank, CITIC Ka Wah Bank, Dah Sing Bank, DBS Bank (Hong Kong), Hang Seng Bank,
ICBC (Asia), Nanyang Commercial Bank, Shanghai Commercial Bank, Wing Hang Bank and Wing
Lung Bank.
I look forward to your continuing support of the HKMC and our debt issuance activities.
Finally, may I wish you all a healthy and prosperous Year of the Golden Pig. Thank you.