Airport Authority in second issue of retail bonds

The Airport Authority (AA) today (March 10) announced its second issue of bonds for retail investors in Hong Kong following the successful first placement of AA retail notes a year ago.

Speaking at the bond issue signing ceremony, the Secretary for Financial Services and the Treasury, Mr Frederick Ma, said statutory bodies and government owned corporations like the Airport Authority could play an important role in the bond market.

"At the end of 2002, these bodies took a 12% share of the market in total outstanding Hong Kong dollar issues. They also constituted 12 per cent of new issues of Hong Kong dollar bonds in 2002," he said.

"As a group, they are the third largest issuers of Hong Kong dollar bonds outside of the Exchange Fund programme, after authorised institutions and non-multilateral development bank overseas borrowers, and ahead of local corporates."

Mr Ma said that apart from the Exchange Fund issues, today's issue by the Airport Authority of a Hong Kong dollar bond with a tenor of seven years was the first long-term Hong Kong dollar issue by a local public corporation.

He said the government encouraged such long term issues, because they widened the choice available to investors, deepened the market and met the growing demand for high quality, long-term papers.

In the Budget announced last week, the Financial Secretary has proposed to grant a 100% concession on profits tax for qualified debt instruments with a maturity period of seven years or more, and to exempt 50% profits tax for such instruments with a maturity period of three years or more.

The chairman of the Airport Authority, Dr Victor Fung, said that before the AA's debt issues in the retail bond market, debt investment for the general public focussed mainly on bank deposits and other investment funds.

"We are providing debt instruments with an investment grade as high as the Hong Kong Government, in a diversified and growing industry. Hong Kong retail investors can now enjoy the safety, security, and a rate of return and maturity previously only available to institutions," he said.

"In the current international environment, these are important developments," said Dr Fung.

End/Monday, March 10, 2003