HONGKONG Bank is claiming line honours in the Hong Kong dollar floating rate certificate of deposit (FRCD) market after massive investor demand prompted it to double a $1 billion FRCD issue launched only 10 days ago. Andrew Fung, domestic market manager with the arranger, HSBC Markets, said the three-year issue, Hongkong Bank's first from its $8 billion certificate of deposit (CD) programme, was swamped by investors, and doubled to $2 billion. He said the bank received $3.88 billion worth of applications for the issue, making it the most successful floating rate certificate of deposit (FRCD) issue this year in terms of swift syndication and strong demand. FRCDs are debt securities paying investors a floating rate of interest for the life of the issue - in this case, a coupon of 25 basis points (0.25 percentage points) above the one-month Hong Kong interbank offered rate. The bank said at the time of the issue launch it would be seeking access to the liquidity adjustment facility (LAF) operated by the Hong Kong Monetary Authority. LAF access makes debt securities more attractive because holders of the securities can engage in repurchase agreements with the Authority, increasing flexibility when managing liquidity. The LAF has so far been restricted to government bills and notes, and provision has been made for issues from the Mass Transit Railway Corp and the Provisional Airport Authority. The private sector issues qualifying for the LAF are the $2.3 billion floating rate note (FRN) issued by Wharf (Holdings), a $3 billion FRN by Sun Hung Kai Properties, a $3.2 billion FRCD from Hongkong Bank, a $2.5 billion FRCD from Standard Chartered Bank, and a $1 billion FRCD from Bangkok Bank. The three criteria for LAF access are that the securities are lodged with, and cleared through, the Authority's Central Moneymarkets Unit Service (CMU), that there is an explicit rating of a certain level, and marketability. The FRCDs would meet the Authority's criteria, Mr Fung said. They would be cleared through the CMU, Moody's Investors Service had confirmed the issue rating - the bank is rated A2 long-term for Hong Kong dollar issues - and BOT International, Sakura Finance Asia and Societe Generale Asia would ensure marketability. Dave Ngan, assistant general manager with BOT International said the market-makers would be offering two-way pricing from today. Stuart Gulliver, HSBC Markets' head of treasury and capital markets, said the bank decided to scale the issue back to $2 billion despite the strong demand because it wanted leeway for further issues from its programme. This was the first public issue from the facility, which was signed last October, Mr Gulliver said, adding that interest was so strong that the deal had 17 lead managers. He would not disclose how much the bank had issued in private placements, but sources said HSBC Markets completed a $500 million private placement, and a $50 million private placement for Hongkong Bank earlier this month. The only other issue to come close to Hongkong Bank's in terms of investor demand was the Bank of China (BOC) which earlier this year issued a record-breaking $5 billion FRCD.