************************************************************
The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) announces today (December 8) the introduction of two measures to further promote local Hong Kong dollar (HKD) bond market development.
(a) Streamlining of tenors of bonds issued under the Exchange Fund Bills and Notes (EFBN) Programme and the Hong Kong Government Bonds (GB) Programme
The issuance of Exchange Fund Notes (EFNs) and Government Bonds (GBs) will be streamlined to minimise overlap in longer tenors and establish a single benchmark yield curve. Starting from January 2015, the HKMA will stop new issuance of EFNs with tenors of three years or above. The HKMA will issue additional Exchange Fund Bills to replace maturing EFNs of those tenors to maintain the overall size of Exchange Fund papers as required. At the same time, new issuance of two year GBs will cease and new issuance of GBs will be for tenors of three years and above. The amount of these GB new issuances will be suitably increased to meet investors' demand for longer term high-quality HKD bonds upon cessation of new issuance of EFNs of three years or above. The revised EFN issuance schedule for the first quarter of 2015 is attached at Annex 1.
(b) Discount Facility for Hong Kong Government Bonds (GBs)
The HKMA will introduce a discount facility for GBs with effect from December 15 so as to provide greater flexibility for banks to manage liquidity. The facility will provide up to a total of HK$10 billion overnight liquidity against a sale and repurchase of GBs. The HKMA would obtain funding from the market to maintain the size of the Aggregate Balance as needed. The terms and conditions of the facility are set out at Annex 2.
The Exchange Fund Bills and Notes (EFBNs) Programme was introduced in 1990 to help enhance monetary management and facilitate the development of the Hong Kong bond market through supply of high-quality HKD debt securities and establishment of a benchmark yield curve from 3 months to 15 years. The GB Programme was launched by the Hong Kong Government in 2009 to promote further and sustainable development of the local bond market through systematic issuance of GBs. Outstanding EFBNs and GBs stood at HK$752.3 billion and HK$96.5 billion respectively at the end of November 2014.
Ends/Monday, December 8, 2014
Issued at HKT 16:03
NNNN
