peter pang : hong kong mortgage corporation retail bond issues 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, 1 september 2006. * * * 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 next monday. five years ago, in october 2001, the hkmc introduced a mechanism to offer retail bonds through placing banks. this move received very warm welcome from both the banking sector and retail investors. so far, we have issued eight retail bonds for a total amount of hk $ 11 billion. two major factors are behind the success of the hkmc's retail bond issues. first it is our strong credit rating. in fact, our credit rating has recently been upgraded by s & p ’ s to aa with stable outlook and by moody's to aa3 with positive outlook. secondly, the hkmc meets the needs of retail investors through continual product innovation. on this occasion, we again bring some new features to our retail bond issuance. apart from issuing two - year notes in hong kong dollar and in us dollar, we are introducing a new 10 - year hong kong dollar zero coupon bond. this is the first time that a zero coupon bond product is offered to the retail public in hong kong. it is also the first time we are issuing retail bond with a ten - year tenor. " zero coupon " bonds are intended for investors who wish to save up funds for longer - term use. they do not need the cash flow from the interest payments on conventional bonds, but they would wish to save up the principal and interest for future retirement or children ’ s education. by investing around hk $ 32, 000 in this zero coupon bond, the investor will receive hk $ 50, 000 after ten years. if investors should find a need to sell the bonds prior to maturity, they are free to do so. we have a market making arrangement with our placing banks to provide quotes to buy such bonds to ensure secondary market liquidity. apart from the zero coupon bond, the hkmc is also issuing two - year us dollar retail bond, following our successful, inaugural issue of retail us dollar bond last year. we are now offering two - year retail bond den

efforts to develop the bond markets. at the national level, initiatives such as consolidation of issuance in a few benchmark maturities and development of interdealer markets have helped increase liquidity and improve reliability of yield curves in a number of jurisdictions. meanwhile, collaborative efforts are being made in regional forums. a notable example is asean + 3 ’ s asian bond markets initiative with the strong support from adb. the initiative has been looking into both demand and supply side issues pertinent to the development of the bond markets. under the initiative, a credit guarantee and investment facility has been set up as a trust fund of adb to provide credit guarantee to allow investment - rated issuers to issue local currency bonds in asean + 3 markets. another good example is the asian bond fund project of the executives ’ meeting of east asia - pacific central banks ( emeap ). the launch of the abf funds introduced to the region ’ s bond markets a new low - cost and efficient product in the form of passively - managed index bond funds and helped catalyse infrastructure, tax and regulatory reforms at both the regional and domestic levels. the hong kong monetary authority took an active part in the design and implementation of the project. these efforts, along with the rapid economic growth and improved investment climate, have contributed to considerable growth in the local currency bond markets. according to adb, the bis central bankers ’ speeches amount of local currency bonds outstanding in emerging east asia increased by more than ten folds from us $ 528 billion prior to the asian financial crisis in 1996 to us $ 5, 479 billion in 2011. we have also seen the interesting development of offshore bond markets. in hong kong, the rmb bond market has grown substantially since the first issuance in 2007, with total issuance increased to over rmb 100 billion in 2011 from rmb 10 billion in 2007. the range of issuers has also diversified, from predominantly the sovereign and banks in china to multinational companies and international financial institutions. among the latter, adb was the first to issue rmb bond in hong kong in october 2010. a number of multilateral agencies also issued rmb bonds in hong kong after adb ’ s debut issue. with the rapid growth of china ’ s cross - border trade and investment flows, the offshore rmb bond market would provide a useful financing platform and facilitate the greater use of rmb in these transactions, thereby minimising the currency risk associated with the use of a third