The Hong Kong Mortgage Corp's first issue of fixed-rate notes received a warm response from the market with applications totalling $3.22 billion, 6.4 times the $500 million available. The notes form part of corporation's fund-raising exercise to help finance its acquisition of mortgages from banks, which it then repackages into debt securities. The corporation hopes to encourage the development of the local debt market and reduce banks' exposure to property loans. The corporation is forecast to buy up to $15 billion worth of mortgage loans this year, following the $1.65 billion of mortgage loans it has acquired since November. The new three-year notes issued yesterday will mature on March 12, 2001, and pay annual fixed interest of 8 per cent. The corporation's senior vice-president Philip Li Wing-kuen said the successful tender demonstrated wide support for the concept with many local and overseas investors seen bidding for the notes. He said the corporation would raise at least $7 billion this year by issuing more notes in Hong Kong and overseas and also would rely on banks' revolving credits and bridging loans. 'We may issue floating-rate notes in future. However, it is the corporation's long-term plan to issue mainly fixed-rate notes in a bid to help the development of the fixed-rate debt market in Hong Kong.' Commonwealth Bank of Australia treasurer Andrew Fung Hau-chung said the notes received a tender yield of 8.43 per cent, better than the market expected. 'The tender yield is 65 basis point higher than the three-year Exchange Fund notes, which is pretty good since the corporation is a new issuer in the debt market.'