THE HONG KONG MORTGAGE CORPORATION LIMITED
NOTE ISSUANCE PROGRAMME
The Hong Kong Mortgage Corporation Limited (HKMC) is pleased to announce the launch of 2-year notes of HK$500 million under its HK$20 Billion Note Issuance Programme (NIP). The new issue will carry a coupon of 6.05% (payable semi-annually). It will be tendered on 13 December 2000 (Wednesday). The key terms and conditions and timetable for the issue are set out in Annex 1.
The issue will be divided into two portions for allocation in the primary market. The bigger portion, with a size of HK$400 million, will be restricted for competitive bidding by the Recognised Dealers under the tendering mechanism administered by the Hong Kong Monetary Authority (HKMA) for Exchange Fund paper and Specified Instruments (including NIP notes). A separate portion of HK$100 million will be set aside for non-competitive bidding by retail investors.
This is the third NIP issue with a retail tranche. The objective of this initiative is to further enhance the HKMC's fund-raising capabilities by broadening its investor base to include retail investors and to promote the development of an active retail bond market in Hong Kong through providing an efficient platform for the retail public to invest in and trade the NIP Notes. Retail investors may submit their applications for the new issue by using Application Form or through banks, brokers or the Central Clearing and Settlement System (CCASS) under the Electronic Initial Public Offer method. The HKMC has appointed Hang Seng Bank as the receiving bank for the application forms and underwriter for the retail portion of the NIP notes.
The commencement date for retail investors to apply for the NIP notes is 5 December 2000. Applicants are required to return the application forms to the 12 designated branches of Hang Seng Bank (see Annex 2) by 12:00 noon on 11 December 2000 or to give electronic instructions through the CCASS by 3:45 p.m. on 11 December 2000.
Retail investors need only specify the amount they apply for in their application. The application amount for each retail investor is subject to a minimum denomination of HK$50,000 and a maximum limit of HK$10 million. The NIP notes will be allocated to them at the average accepted price of the successful bids of the Recognised Dealers in the competitive tender. If there is an over-subscription, allocation will be done through a combination of pro-rata allocation and balloting.
The trading of NIP notes is in scripless form. Transactions traded on the Stock Exchange of Hong Kong will be settled through CCASS.
Retail investors who are interested in subscribing for the NIP notes can obtain the prospectus, the supplemental prospectus and an application form from the offices of the HKMC and Hong Kong Securities Clearing Company Limited, the designated branches of Hang Seng Bank (see Annex 2), and the HKMC's website at www.hkmc.com.hk. A technical brief on the NIP notes is attached at Annex 3. Investors are also welcome to make enquiries through the HKMC Telephone Hotline at 2536 0103 or through the HKMC's e-mail address at bonds@hkmc.com.hk.
The Hong Kong Mortgage Corporation Limited
4 December 2000
Annex 1
(A) Issuing Terms and Conditions
| Stock Code | : | 4310 |
| Series | : | S209 HKMC NIP Notes |
| Issue Size | : | HK$500 million (i) HK$400 million for Recognized Dealers (ii) HK$100 million for retail investors |
| Coupon | : | 6.05% p.a. payable semi-annually |
| Maturity | : | 16 December 2002 |
| Listing | : | Stock Exchange of Hong Kong (SEHK) |
(B) Issuing Timetable
| Commencement Date for retail application | : | 5 December 2000 |
| Closing Date for retail application | : | 11 December 2000 |
| Tender Date | : | 13 December 2000 |
| Issue Date | : | 14 December 2000 |
| Listing and first trading date on the SEHK | : | 15 December 2000 |
Annex 2
HONG KONG
| Head Office | 83 Des Voeux Road Central |
| Central District Branch | 2 D'Aguilar Street |
| Causeway Bay Branch | 28 Yee Wo Street |
| Wanchai Branch | 200 Hennessy Road |
KOWLOON
| Kowloon Main Branch | 618 Nathan Road |
| Tsimshatsui Branch | 18 Carnarvon Road |
| Yaumati Branch | 363 Nathan Road |
| Kwun Tong Branch | 70 Yue Man Square |
| Pei Ho Street Branch | 151 Pei Ho Street |
NEW TERRITORIES
| Chung On Street Branch | 38 Chung On Street |
| Shatin Branch | Shop No. 18 Lucky Plaza |
| Yuen Long Branch | 93 Castle Peak Road, Yuen Long |
Annex 3
HK$500 Million 2-year 6.05% Notes due 16 December 2002
What are HKMC's NIP Notes (NIP Notes or Notes)?
Why to issue a retail tranche for the NIP Notes?
What are the benefits of investing in HKMC's Notes (HKMC Notes)?
What are the key terms of the upcoming Note Issue?
| Stock code Series Issue Amount Retail tranche Recognized Dealers tranche Issue Date Maturity Date Coupon Rate Annualised Yield Denomination Listing |
4310 S209 HK$500 million HK$100 million HK$400 million 14 December 2000 16 December 2002 6.05% p.a., payable semi-annually 6.14% p.a. (at price = 100.00%) HK$50,000 The Stock Exchange of Hong Kong Limited |
Why has HKMC appointed an underwriter for the retail tranche?
What is the timetable for public subscription for the upcoming Note Issue?
| Action Item | DATE |
| Opening of retail application period | 5 December 2000 (Tuesday) |
| Closing of retail application period | 11 December 2000 (Monday) |
| Deadline for withdrawal of retail applications | 12 December 2000 (Tuesday) |
| Tender date | 13 December 2000 (Wednesday) |
| Listing and first trading date on SEHK | 15 December 2000 (Friday) |
How can retail investors apply for the upcoming Note Issue?
Retail investors may apply for the Notes by using:
a) Application Form: or
b) Electronic Initial Public Offer method through brokers, banks or the Central Clearing and Settlement System (CCASS).
Hong Kong Securities Clearing Company Limited ("Hongkong Clearing") as a Recognized Dealer will act on behalf of retail investors to submit their applications (non-competitive tenders) to the HKMA.
(a) Application by using an application form
i) investors can obtain the Prospectus, the Supplemental Prospectus, and application form from the offices of Hongkong Clearing and the HKMC, and designated branches of Hang Seng Bank (the Receiving Bank) or download copies from HKMC's website at www.hkmc.com.hk;
ii) completed application forms together with a cheque payable to "Hang Seng (Nominee) Limited - HKMC HK$20 Billion NIP" and crossed "Account Payee Only" for the application amount should be submitted to the designated branches of Hang Seng Bank before 12:00 noon on 11 December 2000.
(b) Application by the Electronic IPO method
i) retail investors may give their application instructions and make payment electronically through CCASS terminals of a stockbroker;
ii) through a custodian bank which has an account with CCASS (see attached List I);
iii) through CCASS directly - call the CCASS Phone System to enter your instructions on your touch-tone telephone (available to existing CCASS Investor Participants only); or
iv) deadline for EIPO applications is 3:45 p.m. on 11 December 2000.
Tender results and allotments of Notes for the retail tranche will be announced on 14 December 2000 in the South China Morning Post, the Hong Kong Economic Journal, and the Hong Kong Economic Times.
The Notes are scripless and retail investors' interests in the Notes are recorded electronically in CCASS - retail investors must therefore credit their Notes to their own CCASS Investor Accounts or their broker/bank's CCASS Participant Accounts. If Noteholders do not make prompt arrangements to have the Notes credited to an account at CCASS, Hongkong Clearing may sell the Notes and remit the proceeds to the Noteholders.
No Multiple Applications
If you make more than one application, whether by giving electronic instructions to CCASS and/or by using an Application Form, only one such application for the highest principal amount of the Notes will be accepted, subject to the maximum principal amount of HK$ 10 million.
What price will retail investors pay for the HKMC NIP Notes?
Application Price: 100.00% of the principal amount of Notes applied for. The principal amount of Notes applied for must be a minimum of HK$50,000 or a whole multiple of HK$50,000. The maximum principal amount of Notes for a single application is HK$10 million.
Subscription Price: Average accepted price (AAP) of the successful bids made by the Recognized Dealers.
For example, Recognized Dealers bids accepted as follows:
| % of Principal Amount | |
| HK$ 100 million | 99.90 |
| HK$ 150 million | 99.85 |
| HK$ 150 million | 99.75 |
| Average accepted price | |
| HK$ 400 million at | 99.83 |
| Retail tranche: | |
| Investors get Notes at | 99.83 |
| $50,000 x 99.83% = $49,915 |
Difference in Application Price and Subscription Price:
i) refund the relevant part of the application monies if the Application Price (@100.00%) is larger than the Subscription Price (or AAP), or
ii) additional payment is required from successful applicants if Subscription Price (or AAP) is larger than the Application Price (@100.00%)
Hongkong Clearing may sell the Notes to recover the shortfall in application money if the additional payment is not made promptly.
What happens if the Notes are oversubscribed?
Retail investors will get full allotment if the total principal amount of the Notes under the retail applications is less than or equal to the principal amount of Notes allocated for the retail tranche.
If the retail tranche is oversubscribed, the Notes will be allotted by a pro-rata rounded down method, and if necessary, then followed by a ballot:
For example: If the allotment ratio = 50%
| Principal Amount of Notes Applied for (HK$) | Principal Amount of Notes Allotted (HK$) |
100,000 150,000 | A ballot chance for 50,000 50,000 50,000 (rounded down from 75,000) plus a ballot chance for another 50,000 |
How can retail investors trade the NIP Notes in the secondary markets?
Exchange trade
Over-the-counter trade
What will be the factors affecting the market price of NIP Notes and where can investors obtain information about the current yield level?
After the tender date, the price of the Notes will fluctuate with the changes in interest rates. Generally, the price will rise when there is a fall in interest rates, and vice versa.
Retail investors can find out the current price and yield for Notes through the SEHK's Teletext machine or banks/securities houses.
The following table shows the price vs. yield for the upcoming Note Issue:
100.80 100.60 100.40 100.20 100.00 99.80 99.60 99.40 99.20 99.00 |
5.70% 5.81% 5.92% 6.03% 6.14% 6.25% 6.36% 6.47% 6.59% 6.70% |
What are the costs for initial subscription of NIP Notes?
What are the transaction costs for secondary trading of NIP Notes on the SEHK?
How can investors get more information about the HKMC NIP Notes?
The Prospectus for the NIP and the Supplemental Prospectus for the Notes are available for collection at the following places:
i) The Hong Kong Mortgage Corporation Limited
ii) Hong Kong Securities Clearing Company Limited
iii) Hang Seng Bank - designated branches
For further information:
| HKMC Telephone hotline: | (852) 2536 0103 |
| HKMC Website: | www.hkmc.com.hk |
| HKMC E-mail: | bonds@hkmc.com.hk |
LIST I
List of banks having an account with CCASS
| ABN AMRO BANK N.V. AMERICAN EXPRESS BANK LTD ASIA COMMERCIAL BANK LTD BANGKOK BANK PUBLIC CO LTD BANK AUSTRIA AG BANK OF AMERICA (ASIA) LTD BANK OF CHINA BANK OF COMMUNICATIONS TRUSTEE LTD BNP PARIBAS BOOM SECURITIES (H.K.) LTD BUTTERFIELD TRUST (HONG KONG) LTD CHEKIANG FIRST BANK LTD CHIYU BANKING CORPORATION LTD CITIBANK N.A CREDIT AGRICOLE INDOSUEZ CREDIT COMMERCIAL DE FRANCE D.A.H. PRIVATE BANK LTD DAH SING BANK LTD DAO HENG BANK LTD DBS KWONG ON BANK LTD DEUTSCHE BANK AG FIRST PACIFIC BANK LTD FORTIS BANK ASIA HK HANG SENG BANK LTD HSBC BANK USA HSBC INVESTMENT BANK ASIA LTD HSBC PROVIDENT FUND TRUSTEE (HONG KONG) LTD HUA CHIAO COMMERCIAL BANK LTD ING BANK N.V. INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LTD KINCHENG BANKING CORPORATION |
KWANGTUNG PROVINCIAL BANK LIU CHONG HING BANK LTD LLOYDS TSB BANK PLC NANYANG COMMERCIAL BANK LTD OVERSEA-CHINESE BANKING CORPORATION LTD OVERSEAS TRUST BANK LTD OVERSEAS UNION BANK LTD PO SANG BANK LTD SCHRODER INVESTMENT MANAGEMENT (HONG KONG) LTD SHANGHAI COMMERCIAL BANK LTD SIN HUA BANK LTD STANDARD CHARTERED BANK THE BANK OF BERMUDA LTD THE BANK OF EAST ASIA LTD THE BANK OF NOVA SCOTIA THE BANK OF TOKYO-MITSUBISHI LTD THE CHASE MANHATTAN BANK THE CHINA AND SOUTH SEA BANK LTD THE CHINA STATE BANK LTD THE DEVELOPMENT BANK OF SINGAPORE LTD THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD THE HONGKONG CHINESE BANK LTD THE NATIONAL COMMERCIAL BANK LTD UNITED CHINESE BANK LTD UNITED OVERSEAS BANK LTD WING HANG BANK LTD WING LUNG BANK LTD YIEN YIEH COMMERCIAL BANK LTD |
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