XN000022-1991-11-06 — Page 57

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WEDNESDAY, NOVEMBER 6, 1991

RESOLUTION UNDER LOANS ORDINANCE MOVED

THE SECRETARY FOR MONETARY AFFAIRS, MR DAVID NENDICK, TODAY

A MOTION (WEDNESDAY) MOVED

UNDER THE LOANS ORDINANCE IN THE LEGISLATIVE COUNCIL.

THE MOTION IS AIMED TO PROVIDE THE GOVERNMENT WITH AUTHORITY TO BORROW IN HONG KONG FOR THE PURPOSES OF THE CAPITAL WORKS RESERVE FUND OR THE CAPITAL INVESTMENT FUND SUMS NOT EXCEEDING HK$5 BILLION IN TOTAL.

MR NENDICK SAID THAT ON MARCH 6 THIS YEAR, THE FINANCIAL

SPEECH FOR SECRETARY MENTIONED IN HIS BUDGET

1991/92 THAT A WELL STRUCTURED AND MANAGED BORROWING PROGRAMME THROUGH THE ISSUE OF SHORT- TERM GOVERNMENT BONDS WOULD BE APPROPRIATE FOR HONG KONG.

HE ALSO MENTIONED THAT THE PROCEEDS OF THE BORROWING WOULD BE USED ONLY FOR CAPITAL PROJECTS.

PROGRAMME

"DETAILS OF THE PROGRAMME HAVE NOW BEEN WORKED OUT AND THESE

INFORMATION ARE DESCRIBED IN THE

MEMORANDUM ALREADY CIRCULATED TO MEMBERS, HE SAID.

וה

MR NENDICK SAID THE DIRECTOR OF THE OFFICE OF THE EXCHANGE FUND WOULD BE THE ISSUING AGENT OF GOVERNMENT BONDS.

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INITIALLY AROUND HK$500 MILLION OF TWO-YEAR BONDS WOULD BE ISSUED FOUR TIMES A YEAR THROUGH OPEN TENDERS ON A BID-PRICE BASIS.

OF

MILLION IN ADDITION, BONDS UP TO HK$100

PER ISSUE MIGHT BE MADE AVAILABLE TO THE OFFICE OF THE EXCHANGE FUND FOR THE PURPOSES LAST RESORT SUPPLY TO MARKET MAKERS.

"THE BOND PROGRAMME WILL,

THEREFORE, BUILD UP ΤΟ HK$4.8 TWO YEARS BILLION, OR SAY, HK$5 BILLION, IN

TIME COMPRISING ISSUES OF HK$600 MILLION EACH," THE SECRETARY EXPLAINED.

MR MARKET,

MARKET

EIGHT

NENDICK

IN ORDER TO MAINTAIN A LIQUID SECONDARY SAID A NUMBER OF AUTHORISED INSTITUTIONS UNDER THE SUPERVISION OF THE COMMISSIONER OF BANKING WOULD BE APPOINTED AS

MAKERS WHICH WOULD QUOTE BID AND OFFER PRICES FOR THE BONDS.

LIQUIDITY OF

TO FURTHER ENHANCE

THE MARKET, MARKET MAKERS SUBJECT WOULD BE ALLOWED TO RUN SHORT POSITIONS IN ANY ISSUE OF BONDS

MANAGEMENT MEASURES TO THEIR COMPLIANCE WITH THE RISK

SPECIFIED BY THE DIRECTOR OF THE OFFICE OF THE EXCHANGE FUND.

A LIQUID SECONDARY MARKET WOULD HELP TO

PROGRAMME то INVESTORS AND ATTRACTIVENESS OF THE BOND BORROWING COST OF GOVERNMENT, MR NENDICK ADDED.

THE ENHANCE

REDUCE THE

MR NENDICK POINTED OUT THAT THE BONDS WOULD LIQUEFIABLE ASSETS UNDER THE BANKING ORDINANCE.

QUALIFY

AS

/"INTEREST INCOME