XN000022-1995-11-02 — Page 4

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First issue of 7-year Exchange Fund Notes to be launched

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The Financial Secretary, Mr Donald Tsang, announced today (Thursday) the Government's decision to launch the 7-year Exchange Fund Notes.

In a speech to the Seminar on Global Payment Systems organised by the Hong Kong Monetary Authority (HKMA) that opens today, Mr Tsang said the first issue of the 7-Year Exchange Fund Notes, which will be offered on a quarterly basis, will open for tender later this month.

years.

Existing Exchange Fund paper has maturities of two years, three years and five

"The development of Exchange Fund Notes has provided a reliable benchmark yield curve for Hong Kong dollar debt," Mr Tsang told the seminar of central bankers and market practitioners from around the world.

"We believe that now is the right time to extend the yield curve by issuing 7- Year Notes. This will be another milestone in our efforts to develop Hong Kong's debt market."

Preparation of the launch of the 7-Year Exchange Fund Notes has geared up following the favourable market reception to the 5-Year Notes, which were first introduced in September last year. So far, five issues have been offered, with an average rate of over-subscription of 3.34 times.

Chief Executive of HKMA, Mr Joseph Yam, said: "The introduction of the 7- Year Notes underscores HKMA's continuous efforts to broaden and deepen the Hong Kong dollar debt market with the increase of the supply of top quality and highly marketable debt instruments."

The Chinese side has expressed full support for the issuance of 7-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.