All retail investors who submitted valid applications for the Hong Kong government's first securitised bond issue will receive at least one bond each - even though applications far exceeded the amount on offer, government officials said yesterday. This was done to meet the government's aim to achieve as wide a distribution as possible for the $6 billion issue, they said. At a signing ceremony yesterday, Financial Secretary Henry Tang Ying-yen hailed it as a landmark transaction. The fact that it was more than two times oversubscribed 'clearly signifies the potential breadth of the investor base for good quality Hong Kong dollar debt instruments', he said. The bonds are backed by the revenues of five tunnels and the Tsing Ma Bridge. Annual net toll revenues from the bridge and tunnels are estimated at $1.1 billion. The issue was open to retail and institutional investors. The minimum investment was $51,000. 'It lays a good groundwork for the $20 billion bond issue' the government was planning to launch in mid-July, pending approval from the Legislative Council, Mr Tang said. 'I am very happy that we managed a wide distribution this time. Every retail investor that applied [will get] at least one [bond].' The $2.47 billion worth of bonds offered to retail investors were split into three tranches with maturities of three, five and seven years. As expected, the largest amount of bonds - $880 million worth - was allocated to the three-year tranche. The size of the five-year tranche was fixed at $800 million, while the remaining $790 million was allocated to the seven-year tranche. Three major rating agencies all confirmed their earlier preliminary ratings for the bond issue yesterday, which were the same as their respective Hong Kong sovereign ratings. Due to the recent increase in bond yields, the retail tranches were all priced at a slight discount to par in order to deliver the promised return to investors. The three-year bond, which carries a 2.75 per cent coupon, was priced at 98.87 to yield 3.185 per cent, or 45 basis points more than the equivalent Exchange Fund Note. The 3.60 per cent five-year bond was priced at 97.90 to yield 4.128 per cent, and the 4.28 per cent seven-year bond was priced at 97.40 to yield 4.803 per cent. Mr Tang would not speculate on the impact that a possible interest rate rise in the US would have on the value of the bonds. The bonds begin trading on Monday.