1. Specified Instruments
| Issuer | Wholly-owned government institutions |
| Tenors | Varies, depending on issue. Typically, 1-7 years |
| Currency | Hong Kong dollar |
| Interest Payment | Issues have either fixed- or float-rate interest paid semiannually according to actual number of days in an interest period on the basis of a 365-day year. |
| Average Issue Size | HKD0.5 - 1.0billion |
| Minimum Amount of Tender | Generally, HKD50,0000. Each tender bid must be for an integral multiple of the minimum denomination of the notes/bonds. |
| Method of Sale in the Primary Market | Application through issuer appointed Placing Banks or through the Hong Kong Settlement and Clearing Corporation. |
| Who May Apply | Generally, open to resident and nonresident individual and corporate investors through designated Placing Banks. |
| Redemption | Notes/bonds are redeemed at par upon maturity. Notes/bonds are not redeemable prior to maturity. Mortgage Backed Securities from HKMC may have a different maturity structure depending on the tranche. |
| Taxation | Notes/bonds are exempt from profits tax and stamp duty. |
| Secondary Market Trading | Market making arrangements are done through appointed Placing Banks or by listing at the Hong Kong Stock Exchanges (HKEx), depending upon the issue. Most corporate issues are not listed in the HKEx. |
2. Private Corporate Bonds
| Issuer | Registered Local Companies |
| Tenors | Varies, depending on issue. 1-10 years. |
| Currency | Hong Kong dollar |
| Interest Payment | Fixed or floating (3- to 6-month HIBOR + spread) according to actual number of days in an interest period on the basis of a 365-day year. |
| Average Issue Size | HKD0.5 to 1billion |
| Minimum Amount of Tender | Generally, HKD50,0000. Each tender bid must be for an integral multiple of the minimum denomination of the Notes. |
| Method of Sale in the Primary Market | Application through issuer appointed Placing Banks or through the Hong Kong Settlements and Clearing Corporation. |
| Who May Apply | Some issues are not open to nonresidents. |
| Redemption | Notes/bonds are redeemed at par upon maturity. Notes/bonds are not redeemable prior to maturity. |
| Taxation | Notes/bonds are exempt from profits tax and stamp duty. |
| Secondary Market Trading | Market making arrangements are done through appointed Placing Banks or by listing at the Hong Kong Stock Exchanges (HKEx), depending upon the issue. Most corporate issues are not listed in the HKEx. |
A. Specified Instrument Issuers
Specified Instruments refer to the four types of bond issues under the Exchange Fund Notes Issuance Programme of the Hong Kong Monetary Authority. Specified Instruments issuers are: Airport Authority, Hong Kong Mortgage Corporation, Kowloon-Canton Railway Corporation and Mass Transit Railway Corporation.
Hong Kong Mortgage Corporation is the largest issuer of mortgage-backed securities in Hong Kong. The HKMC was established to buy mortgage loans from various banks and repackage them to negotiable instruments.
Click here for HKMC’s latest Programme and Issue Prospectuses.
The Hong Kong Link 2004 Limited is a wholly-owned special purpose company of the Hong Kong SAR government. Hong Kong Link 2005 was established to purchase the Toll Revenues Bond from the Hong Kong SAR Government, Hong Kong Link 2004 in turn issued notes/bonds to fund the purchase of the Toll Revenue Bonds. Principal repayment and interest payments for the notes/bonds are backed by the revenues from toll facilities.
Click here for the Hong Kong Link 2004 Prospectus.
B. Private Corporate Bond Issuers
Total private corporate issues in Hong Kong, China is currently just over twice the size of the Exchange Fund Bills and Notes market. As of end of 2004, the total value of outstanding private sector bonds was HK$ billion. The largest corporate HKD issuer are local banks and corporations, followed by international banks and then supranational bodies.