The Hong Kong Mortgage Corp has raised another $500 million in its second public tender of fixed-rate bonds. The tender received subscriptions of $3.27 billion, 6.5 times the $500 million available and slightly more than the $3.22 billion received last time. The average accepted yield for this tender was 8.58 per cent, 15 basis points higher than the previous 8.43 per cent. Chase Manhattan Bank's head of consumer loan business Alan Tsang Hing-lun said the result reflected investors' expectations on where long-term interest rates were going. He said this would not affect the corporation's pricing of its second batch of fixed-rate mortgages to be launched after a six-month pilot scheme that was launched on March 18. He said the corporation would consider carefully before determining the price for the second batch. There has been concern the corporation's rising funding costs might have left it with less room to cut prices in order to maintain the competitiveness of fixed-rate products alongside floating-rate products. Ordinary floating-rate residential mortgage prices were reduced by 25 basis points after a cut in the prime rate by the same amount last Friday. 'The crucial point is that we don't know if the amount raised is to be used to offer fixed-rate mortgages or to buy floating-rate home loans from banks,' Mr Tsang said. The interest rate on the initial fixed-rate products was set at 10.5 per cent and the second batch's attractiveness would be reduced if the rate were increased above this level, Mr Tsang said. Chase Manhattan has seen a minor reduction in the number of inquiries for fixed-rate products since last Friday. Until yesterday, the bank had approved more than $125 million in fixed-rate mortgages compared with its $250 million quota. After yesterday's sale, the corporation would have a total of $11 billion in debt-funding, of which $1 billion was raised through public bond sales and $10 billion represented a standby credit line provided by the Exchange Fund.
