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Speech by FS at Securitisation ceremony of Government-owned tunnels and bridges


Following is the speech (English only) by the Financial Secretary, Mr Henry Tang, at a ceremony to mark the success of the HK$6 billion Securitisation of net toll revenues from Government-owned tunnels and bridges at Government House this (May 4) afternoon:

Ladies and gentlemen,

Good afternoon. I am delighted to be here this afternoon and have this opportunity to speak to mark the success of the Government's first offering of securitisation bonds.

This is a landmark transaction for Hong Kong and I am very confident it will be remembered as a successful one. We are very much encouraged by the positive response of investors. With the help of the widest distribution network ever established for a bond offering in Hong Kong, together the retail bonds and the notes on the institutional side are more than two times oversubscribed. This clearly signifies the potential breadth of the investor base for high quality Hong Kong dollar debt instruments.

This is the first time retail investors can purchase Hong Kong dollar denominated securitisation bonds and the total amount being applied for is more than $7 billion. That alone surpasses the overall size of the entire offering. This morning the retail bonds were priced and the size of the three, five and seven-year tranches have been finalised at HK$880 million, $800 million and $790 million respectively. So I am glad to announce that every single retail investor who has made a valid application for the bonds in each tranche will at least receive the principal amount of "one" bond (i.e. $50,000). Allocation of the remaining bonds will be conducted on a pro-rata basis followed by further balloting as described in the prospectus.

The Government's objective is to facilitate further development of the capital market in Hong Kong. I hope this transaction will serve as a stimulus to attract more private sector and non-government entities to consider launching their own structured or plain debt products in Hong Kong and to our retail investors. This will help to consolidate our position as an international financial centre.

The $6 billion raised through this offering will be credited to the Capital Works Reserve Fund after all necessary transaction expenses are deducted. It will be used to finance infrastructure projects for the long-term benefits of Hong Kong. I would like to emphasise again that the Government will continue to maintain strict fiscal discipline. Funds raised through this offering or through the upcoming $20 billion Government bond offering proposed in my maiden Budget will not be used for the purpose of supporting Government's operating expenditure.

I would like to close by thanking our two Arrangers, HSBC and Citigroup, the other eight syndicate members of the institutional tranches, the 23 Placing Banks for the retail tranches, the Hong Kong Stock Exchange, all participating brokers, and everyone else involved in preparing for and bringing this transaction to the market and last but not the least, all the investors who have placed their confidence and their support behind us.

Thank you.

Ends/Tuesday, May 4, 2004


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