The government may postpone its planned $20 billion bond issue if the US Federal Reserve increases interest rates this month, Secretary for Financial Services and the Treasury Frederick Ma Si-hang said yesterday.
His remark came after Fed chairman Alan Greenspan indicated on Tuesday that the US might increase its interest rates faster than expected to curb inflationary pressure.
A rise in interest rates would hurt bond prices, diminishing the appeal of the government issue.
Speaking after a Hong Kong insurance seminar, Mr Ma said it would be possible for the government to delay the bond sale, noting that 'interest rate movements, market conditions and legal documentation preparations would all affect the timetable of the issue'.
But Mr Ma said he would still like to see the bonds issued in the middle of next month as originally planned.
'Many fund managers will take their summer holidays after mid-July. We would like to launch the bond issue roadshow before they are on holiday,' Mr Ma said.
