THE Hong Kong Housing Society will be the first statutory body without a Government guarantee to tap the capital market, with a $2 billion floating-rate note (FRN) issue today.
It is the first time the society, which used to enjoy a positive cash flow, has entered the market as part of a $2.5 billion financial package.
The proceeds will be used as general working capital, but it is understood that most of the funds will be used to pay land premiums to the government.
''The government has given the society more land to develop in order to solve the housing shortage problem. That's why the society can no longer rely on internal resources alone,'' said a market dealer.
The remaining $500 million will be raised through a revolving credit or standby credit facility.
The notes are of 21/2-year maturity with the coupon rate set at 85 basis points above the three-month Hong Kong interbank offered rate (HIBOR).