A day after the financial secretary announced the government's intention to launch a $20 billion maiden bond issue, the details remained sketchy.
Secretary for Financial Services and the Treasury Frederick Ma Si-hang told legislators yesterday that much of the issue's parameters had still to be determined, although he hinted strongly that the issue would consist of different tranches with terms of between five to 10 years' maturity.
'We haven't made a decision on the maturity. But it won't be longer than 10 years,' he said, while also pointing out that forecasts of government spending for the next five years released with the budget yesterday did not include provisions to repay the principal on the bonds.
He told legislators the pricing of the bonds was largely out of the government's hands, as 'the interest rate of the issue depends on several [market] factors, not the subjective view of the government'.
Mr Ma said letters had been sent to investment banks yesterday asking for proposals to be returned by the end of the month on underwriting the bond issue.
Mr Ma emphasised the government's intent to make sure that local investors would be able to buy the bonds, while also targeting global institutional investors.
He said three important factors were: the positioning of US interest rates when the government's bonds are issued; how credit rating agencies view the issue; and investor demand.