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"The launching of the 10-Year Notes is a major milestone in our effort to develop the Hong Kong dollar debt market," said the Financial Secretary, Mr Donald Tsang.
"We will soon have a smooth and reliable benchmark yield curve for Hong Kong dollar debt up to the 10-Year area."
"We have been greatly encouraged by the very favourable reception by the market on the 7-year exchange fund notes since they were launched in November 1995. The issue of 10-year notes is a logical move to further develop the debt market," said the Chief Executive of HKMA, Mr Joseph Yam.
"The Chinese side is fully supportive of the issuance of 10-year exchange fund notes, given its importance to the development of the Hong Kong dollar debt market."
The exchange fund notes programme was introduced in May 1993, with the launch of 2-year notes to replace the 2-year government bonds.
This was followed by the issue of 3-year notes in October 1993, 5-year notes in September 1994 and 7-year notes in November 1995.
So far 40 issues of exchange fund notes have been issued. Thirty-four issues, with a face value of $20.4 billion, are outstanding.
The notes have been favourably received by the market and the average over- subscription rate at tenders is 4.88 times.
The first issue of 10-year exchange fund notes is to be held on October 28 for settlement on October 29,
An amount of $500 million 10-year notes will be offered. Another $100 million will be held as reserve by HKMA for supply to market makers in the secondary market.
The notes will mature on October 30, 2006, and will carry interest at the rate of 7.37% per annum payable semi-annually in arrears. Terms and conditions of the issue are described fully in the information memorandum.
Members of the public who wish to tender for the notes may do so through any of the market makers or recognised dealers on the published list which can be obtained from HKMA at 30th floor, 3 Garden Road, Hong Kong, Tel 2878 8150.
Each tender must be for an amount of $50,000 or integral multiples thereof.