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FRIDAY, NOVEMBER 1, 1991
"LIKE THE EXCHANGE FUND BILLS, THE GOVERNMENT BONDS WILL BE ISSUED IN PAPERLESS FORM, AND BE EXEMPTED FROM PROFITS TAX STAMP DUTY,'
DUTY," MR MACLEOD SAID, ADDING THAT INITIALLY THE MATURITY THE BONDS WOULD BE TWO TO THREE YEARS.
ALSO
AND OF
BOTH
HE SAID THE MARKET STRUCTURE OF THE BOND PROGRAMME WOULD BE SIMILAR TO THAT OF THE EXCHANGE FUND BILLS PROGRAMME RECOGNISED DEALERS AND MARKET MAKERS WOULD BE APPOINTED PRIORITY BEING GIVEN TO EXISTING RECOGNISED DEALERS AND MARKET MAKERS OF THE EXCHANGE FUND BILLS.
ORDINANCE DEBT,
J
WITH
"SUBJECT то THE PASSING OF A RESOLUTION UNDER THE LOANS BY THE LEGISLATIVE COUNCIL TO PERMIT GOVERNMENT то RAISE TO A CEILING, FOR MEETING CAPITAL EXPENDITURE, IT IS OUR INTENTION ΤΟ LAUNCH THE BOND PROGRAMME IN THE LATTER HALF OF THIS MONTH WITH THE ISSUE OF TWO-YEAR BONDS, THE FINANCIAL SECRETARY SAID.
"IT IS
MARKET LATER,
PLANNED TO BRING BONDS WITH LONGER MATURITIES TO THE HAVING REGARD TO GOVERNMENT'S NEED FOR FUNDS AND THE DEVELOPMENT OF THE BOND PROGRAMME, " HE SAID.
MR MACLEOD POINTED OUT THAT INITIALLY THERE WOULD BE FOUR ISSUES A YEAR, EACH WITH A SIZE OF AROUND $500 MILLION.
"IN ADDITION, BONDS OF UP TO $100 MILLION PER ISSUE MAY BE MADE AVAILABLE TO THE OFFICE OF THE EXCHANGE FUND FOR THE PURPOSE OF LAST RESORT SUPPLY TO MARKET MAKERS. THE BOND PROGRAMME SHOULD THEREFORE BUILD UP TO AROUND $5 BILLION IN TWO YEARS' TIME.
UNLIKE THE EXCHANGE FUND BILLS, WHICH WERE ISSUED FOR THE ACCOUNT OF THE EXCHANGE FUND, THE PROCEEDS OF THE BONDS WOULD BE CREDITED TO THE CAPITAL WORKS RESERVE FUND AND THE CAPITAL INVESTMENT FUND FOR THE PURPOSE OF FINANCING CAPITAL PROJECTS, HE SAID.
"I AM CONFIDENT THAT THE BOND PROGRAMME WILL BENEFIT FROM THE HEALTHY MOMENTUM GENERATED IN THE MARKET BY THE EXCHANGE FUND BILLS PROGRAMME.
"WE EXPECT THE GOVERNMENT BOND PROGRAMME TO BECOME AN IMPORTANT COMPONENT OF THE HONG KONG DOLLAR DEBT MARKET AND TO HAVE A FAVOURABLE SPILLOVER EFFECT ON OTHER SEGMENTS OF THE MARKET.
"AT THE VERY LEAST, THE BONDS SHOULD PROVIDE A BENCHMARK FOR LONG-TERM FUNDS IN HONG KONG DOLLARS AND FOR ASSESSING RELATIVE YIELDS AND RISKS OF OTHER HONG KONG DOLLAR DEBT INSTRUMENTS," HE SAID.
ON
OTHER NOTABLE DEVELOPMENTS IN HONG KONG'S DEBT MARKET, MR MACLEOD SAID IN RESPONSE TO A SUGGESTION FROM THE HONG KONG CAPITAL MARKETS ASSOCIATION, THE OFFICE OF THE EXCHANGE FUND WAS DEVELOPING A CENTRAL CUSTODY SYSTEM FOR HONG KONG DOLLAR DEBT SECURITIES IN ORDER TO IMPROVE EFFICIENCY IN THEIR TRADING AND REDUCE SETTLEMENT RISK.
/"SECONDLY, THE