POOR market conditions have compelled the Mass Transit Railway Corp (MTRC) to issue five-year maturity notes instead of the widely-expected seven-year ones.
The move dashed hopes of further extending the current Hong Kong dollar yield curve.
The Hong Kong Monetary Authority yesterday said the tender date for the inaugural issue of MTRC notes, worth $500 million, would be Friday.
The five-year notes, maturing in 2000, will bear interest at the fixed rate of 7.9 per cent, and about 80 basis points above the currently traded Exchange Fund notes of the same maturity.
Market observers said there had been no seven-year public issues since October last year, with investor appetite ebbing.
HSBC Markets domestic markets manager Andrew Fung said: 'The flattening of yield curve in the US which resulted in a much narrowed yield pick-up between the short-dated and long-dated papers has affected investor demand.' Paper with a long maturity had lost its appeal in the territory, given fears of worsening inflation.
