The Hong Kong Mortgage Corp, the largest bond issuer in the city, is facing a possible downgrade of its rating under a review by Moody's Investors Service.
Moody's yesterday said it had placed HKMC on review for possible downgrade of its Aaa long-term local and foreign-currency senior unsecured bond ratings, Aa1 long-term foreign-currency issuer rating and Aaa long-term local-currency issuer rating. It expects to complete the review over the next few weeks.
Moody's explained the review was due to the consideration that HKMC, 100 per cent owned by the Hong Kong government, was regarded as a government-related issuer which would usually be rated at or below the government ratings.
At present, HKMC, which buys mortgage loans from banks and repackage them to sell as bonds in the market, has a rating higher than the Hong Kong government.
But Moody's said even with a downgrade, the corporation's rating was likely to be on par with the government's.
'There is a strong intrinsic economic relationship between HKMC and the Hong Kong government, given its status as a mortgage product provider and the importance of land and property in the Hong Kong economy,' said Leo Wah, a Moody's vice-president and senior analyst.