Retail Exchange Fund Notes Programme Eddie Yue Executive Director Monetary Management and Infrastructure Department Hong Kong Monetary Authority 3 May.

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Presentation transcript:

Retail Exchange Fund Notes Programme Eddie Yue Executive Director Monetary Management and Infrastructure Department Hong Kong Monetary Authority 3 May 2005

Outline I. What are Exchange Fund Notes (EFNs) II. Benefits of investing in EFNs III. Terms of Upcoming issue IV. Timetable

I. What are Exchange Fund Notes? Fixed-income debt securities issued by the HKSAR Government for the account of the Exchange Fund Bear fixed rate of interest (coupon rate), calculated on an actual/365 day basis and payable semi-annually Tenor: 2, 3, 5, 7, 10 years Minimum Denomination : $50,000 First issued in 1993, it has been actively traded among financial institutions

EFN is a major segment in HK dollar debt market

II. Benefits of investing in EFNs 1. High credit quality – Issued by HKSAR Government Exchange Fund 2. Highly liquid secondary market – Retail EFN Distributors are committed to make quotes to buy back the EFNs from their customers 3. Steady stream of income – The coupon on EFN is higher than HK dollar savings and time deposits

Background of Retail Exchange Fund Notes Programme HKMA first launched a 1-year pilot scheme in August 2003, with HK$ 330 million sold to retail investors New features to improve the attractiveness of EFN to retail investors: 1. favourable allotment price (lowest accepted price instead of average accepted price) 2.more distributor banks (increased to 7 from 3; with more than 700 branches) 3.flexible selection of issues (consult distributors, re-opened issues not used)

III. Details of Upcoming issue Issue number : 2705 Tenor: 2 years Tender date: 13 May 2005 Issue date: 17 May 2005 Issue amount: HK$ 300 million for non-competitive tenders (Total issue size HK$ 1,200 million) Coupon rate: 2.6% Denomination: HK$ 50,000, or higher amount in integral multiples thereof

IV. Timetable 4 MayApplication commences at 9:00 a.m. 11 MayApplication closes at 2:00 p.m. 12 MayBanks to submit applications to HKMA 13 MayTender date. Allotment price announced 17 MayIssue date. Banks to notify subscription result to customers