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Enoch Yiu

A HK$3 billion issue of debt paper by Hong Kong Mortgage Corp (HKMC) yesterday drew buying interest from many retail investors.

Bankers said many other companies planned to issue debt paper, including property developer Hysan Development. Hysan is said to be planning an issue of up to US$1 billion in debt paper. However, no details have been fixed.

Bankers said the low-interest-rate environment meant it was cheap for the HKMC to raise funds this way.

Yesterday's HK$3 billion issue comprises three-year notes with an annual interest rate of 3.8 per cent.

The deal was arranged by HSBC.

International Bank of Asia senior vice-president Davy Kwan Kwok-ki  said the HKMC paper was popular with retail investors.

'We have seen many retail investors interested in the HKMC debt paper.

'People just want to put their money into some kind of low-risk investment products which could offer them better returns than the deposit-savings rate.'

The deposit-savings rate for most banks at present stands at 0.125 per cent, compared with the 3.8 per cent offered by the HKMC paper.

Mr Kwan said the HKMC and other Hong Kong companies would be wanting to issue more debt paper in the coming months while interest rates were low.

They would probably be making the issues in the first half of the year, as there was fear that rates would go up during the second half, he said.

HKMC would be one of the major debt paper issuers as it would need to raise funds to finance its purchases of mortgage loans from banks and for other development plans.

The corporation, wholly owned by the Government through the Exchange Fund, was set up to buy mortgages from banks then repackage them into debt paper for sale to investors.

It is an integral part of the Government's plan to reduce banks' exposure to the property market and help develop the debt market in Hong Kong.

Mr Kwan said most investors preferred to invest in short-term paper with two or three years' maturity.

With uncertainty surrounding interest rates, investors did not want money locked in for too long.

For this reason, Mr Kwan believed that most of the near-future issues would also be short-term.



HKMC's $3b in paper hits right spot