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only prudent
which we
to assume that the crisis against
are
seeking to insure would be
characterized by a strong upward movement in
interest rates. This is the major obstacle to
the scheme's feasibility.
(c) The pricing of long term China sovereign
risk. The current price for lending to China,
against Bank of China guarantee, is 1% to 1.5%
above the Hong Kong Inter Bank Offered Rate
(HIBOR), but these rates apply to loans of
The indications are
relatively
short duration.
that for
of 2%
to
maturities of 5 years or more, a rate
2.5% above HIBOR would be demanded.
It is not at the moment possible to estimate
the cost of raising long term funds sufficient
tó
meet the needs of the scheme or whether this
could even be done at all. Institutions are
generally
unwilling to loan for more than 3 to
5 years in these circumstances.
......