First bond issue of URA receives enthusiastic support
The Urban Renewal Authority (URA) today (Tuesday) announced its
debut issue of HK$1,500,000,000 three-year fixed rate bonds
following the recent successful establishment of a Medium Term Note
Speaking at the bond issuing ceremony this afternoon, the Chairman of the URA, Mr Barry Cheung, said: "The MTN Programme is a milestone for the Authority since it came into operation in 2001. All along, we have been taking a prudent approach in financial management to ensure that our urban renewal initiatives are being undertaken in a cost-effective manner. We previously relied solely on bank facilities to meet our funding needs."
In this regard, we have been exploring additional options to raise funds for our present and future projects. Riding on the current capital market environment and the investors' appetite for high quality bonds , we have taken the opportune time to launch our first bond issue with an initial planned size of HK$ 1,000,000,000 under our MTN Programme, said Mr Cheung.
"Setting up the MTN programme initially for this debut bond issue is clearly a win-win option for the URA as well as for the public community," he said. While the URA has been maintaining a healthy and stable financial position since its establishment, Mr Cheung pointed out that the MTN Programme has now provided a platform for the URA to broaden its funding sources.
"Secondly, the bond issue also helps to promote the Hong Kong bond market, echoing the Government's policy directive in promoting the development of the local bond market so as to advance Hong Kong's position as an international financial centre."
Great care has been taken to design the Programme to provide a convenient, flexible and cost-efficient platform for the issuance of debt denominated in HK dollar and other currencies, Mr Cheung noted.
Also officiating at today's ceremony, the Managing Director of the URA, Mr Quinn Law, said: "We are very pleased and encouraged that the Authority's debut bond offering is very well received by the Hong Kong and international institutions. This strong investor support reflects the high regard and confidence which investors hold for the Authority."
A broad range of institutional investors have been attracted by the bond offer, reflecting the investors' interest for quality bond issues in the Hong Kong market.
"In the light of the overwhelming interest which is oversubscribed by over 60 per cent, the URA has decided to increase the issue size from the originally planned size of HK $1,000,000,000 to HK $1,500,000,000 to meet the very strong investor demand," said Mr Law.
As a matter of fact, the bonds issue as well as the MTN Programme have been rated "AA+", on par with the sovereign ratings of the Hong Kong SAR Government in addition to the long-term corporate credit rating of AA+ assigned to URA by Standard & Poor's Ratings Services (S & P) in December, 2008, he added.
According to S & P, the corporate rating reflects the URA's strong stand-alone credit profile, backed by supportive government policies; its leading position as an urban land supplier; its good liquidity; and strong debt protection.
The MTN Programme, which is one of the key instruments to enable the URA to raise debt capital for its urban renewal initiatives in the territory, is jointly arranged by HSBC and Deutsche Bank.
Mr Cheung paid tribute to both HSBC and Deutsche Bank for their valuable advice and support to bring the Programme to conclusion. "We are also grateful to members of the Dealer Group, namely Bank of China (Hong Kong) Limited, Barclays Capital, BNP Paribas, Calyon, Citi, DBS Bank Limited, Deutsche Bank, Goldman Sachs (Asia) L.L.C., HSBC, Standard Chartered Bank (Hong Kong) Limited, Morgan Stanley and UBS AG for their staunch support."
Hailing from a wide geographical and international representation in the industry, the Dealer Group is able to further promote the growth of the bond market, Mr Cheung added.
The bonds of a three-year tenor will carry a coupon of 2.08 per cent per annum, payable quarterly. "To broaden our investors' base and meet our funding requirements, we will consider having additional issues with different maturity dates at a later stage," Mr Law said.