Following is the speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the Retail Bond Offering Launch Ceremony today (April 19):
David (Eldon), distinguished guests, ladies and gentlemen,
It gives me great pleasure to be here with you this afternoon to announce what will be a new chapter in the development of our financial services sector. The Hong Kong Special Administrative Region Government is today taking a significant step forward in fostering the further strengthening of the local bond market, an objective which forms part of our continuing effort to reinforce Hong Kong's position as an international financial centre.
The offering of $6 billion in securitisation bonds backed by revenues to be generated by government-owned tolled tunnels and bridges sets a couple of records for others to emulate:-
(1) it is the largest securitisation bond offering ever in Hong Kong, and amongst the largest in the region;
(2) it will be distributed through the largest retail distribution network ever established for a bond issue in Hong Kong. Over 800 branches of 23 placing banks will be involved, along with all interested brokers who may participate via the Central Clearing and Settlement System of the Hong Kong Stock Exchange.
The offering is not only the first securitisation bond offering by the Government, it is also the first securitisation bond offering available to retail investors.
The securitisation bonds will be listed on the Hong Kong Stock Exchange, another first. Investors may buy or sell the retail bonds through their brokers or the participating banks.
Our intention is to maximise the distribution of bonds to interested retail investors who, just like many of us here in this room, may make use of the tunnels and bridges on a daily basis and are very familiar with them.
As the first securitisation of Hong Kong-based toll roads, this offering will be the first opportunity for retail and institutional investors to participate in this asset class. It enjoys the same credit ratings from the three major agencies as those given to the Hong Kong SAR Government. The offering will consist of three separate tranches of bonds to retail investors and two to institutional investors. Bonds of various maturities are on offer to fit in with different investor appetites. It goes without saying that investors should seek advice from their financial advisers in arriving at their decisions.
Detailed terms and conditions of the offering are clearly spelt out in the prospectus which will be available tomorrow morning through the retail distribution network. A dedicated website will also be up and running by then to provide the same information.
Over the years, the Government has been devoting much effort in developing the local bond market, including encouraging the public sector corporations to issue bonds. I wish to take the opportunity today to encourage the private sector corporations as well to seriously consider issuing Hong Kong dollar bonds as a means for raising capital. Their participation in the bond market will help add impetus to the further development of Hong Kong's financial services industry and the economy as a whole.
Last but not least, I would also like to thank HSBC and Citigroup as the arrangers for the securitisation, all the distributors, HSBC as the sole bookrunner, and many other parties involved in preparing for and executing this offering which I have every hope will be a highly successful one.
Ends/Monday, April 19, 2004