1. The Hong Kong Mortgage Corporation Limited (HKMC)

2. Background information
Established in March 1997
Wholly owned by HKSAR Government through Exchange Fund

3. Mission of HKMC Enhance the stability of the banking sector
Reducing risks of mortgage lending of the banks
Promote wider home ownership

4. Content of our project Compare development of HKMC with the
mortgage-backed security markets in other nation
Recent development
Identify the difference between the two mortgage-backed securitization program

5. Aims of our project Understand the HKMC
Project the future mortgage development

6. Securitization transferring fixed income or credit assets
assets (e.g. Mortgage loan) to
-special purpose vehicle (“SPV”)
-special purpose company (“SPC”)
by financial institution (the originator).
The SPV obtains funding by issuing debt securities.

7. Securitization The Hong Kong securitization market started in may 1994
Bank of America (Asia) & the assistance of Salomon Brothers Hong Kong
first public mortgage backed securitization in Hong Kong

8. Securitization securitization originated by the US
securitization not known by the Hong Kong people.

9. Securitization-Australia
In 1984 the Queensland state government establishes
an unprecedented secondary mortgage market in Australia.
prudential standards for securitization schemes.

10. Securitization-Australia
The Australian market mainly dominated by
<residential mortgage backed issues>
The market now includes the following
credit card
consumer receivables
commercial leases

11. Securitization-Australia
Infrastructure development
tax concessions is a temptation
The attractiveness of securitization
in connection with
raising finance of infrastructure financing.
SPV must -retain effective control
-ownership of the facility (X>25years)

12. Securitization-Australia
Projects should be approved by the Development Allowance Authority.
there are 7 types of eligible project:
Land transport facilities
Seaport facilities
Electricity generation facilities
Air transport facilities
Gas pipeline facilities
Water supply facilities
Sewerage or waste water facilities

13. H.K. Vs.U.S.
U.S.
Non-traditional market expands since 2003

14. Non-traditional mortgage market
Typically
Credit grades based upon on the person’s creditworthiness
Factors: credit history, debt ratio, income documentation
Categorized as A, A-, B, C, D

15. Non-traditional mortgage market
At Present,
Left to human underwriters
Use their own judgment to categorize loan by risk level

16. Non-traditional mortgage market
Use of computerized loan-evaluation systems
Forecast the default risk dictated by each mortgage
Determine the individualized interest rates charged to each borrower

17. The Difference between the Guaranteed Mortgage-Backed Pass-Through Programme and Bauhinia Mortgage-Backed Securitisation Programme

18. Difference Date of Issue: Dec, 2001 Date of Issue: Oct, 1999
Pass-Through Programme
Date of Issue: Oct, 1999
The Note holder :
Originating Banks
Bauhinia Programme
Date of Issue: Dec, 2001
The Note holder : Institutional and retail Investors

19. Difference The currency of issue : HK Dollar
Pass-Through Programme
The currency of issue : HK Dollar
The distribution network: Through HKMC
Bauhinia Programme
The currency of issue:
multi-currency
The distribution network: Through dealer group

20. Trend and Recent Development of HKMC

21. Recent development of HKMC
Residential Mortgage Loans
(including Mortgage Loans with HKMC’s Guarantee)

22. Recent development of HKMC
HKMC has successfully issue a large number of mortgage loans to society
successfully achieve it goals

23. Recent development of HKMC
The trend and recent development of Mortgage Insurance Program

24. Recent development of HKMC
The trend and recent development of Mortgage Insurance Program

25. Recent development of HKMC
reasons
an expansion of Mortgage Insurance Program increasing maximum loan-to-value ratio to 95%
the economy in Hong Kong has become better

26. Recent development of HKMC
The MIP has it contribution
people buying houses.
The MIP is successful,
already Insurance HK$ million.

27. Recent development of HKMC
Some recent new
10-year Zero Coupon Bonds( HKMC 1001) at September 12, 2006.
offered at a price of 65%

28. Recent development of HKMC
Some recent new
on Oct 30, Foreign currency rating to Aa1
Local currency rating to Aaa
HKMC's Credit Rating (since July 2005)
Moody's
Short-term
Long-term
Foreign currency (Outlook)
P-1 (stable)
A1 (stable)
Local currency (Outlook)
Aa3 (stable)

29. The Hong Kong Mortgage Corporation Limited Half-year Financial Results

30. The Hong Kong Mortgage Corporation Limited Half-year Financial Results

31. The Hong Kong Mortgage Corporation Limited Half-year Financial Results

32. The Hong Kong Mortgage Corporation Limited Half-year Financial Results

33. Conclusion HKMC is trend to be more mature More Diversify products
Promote secondary mortgage market
Play an important role in banking sector

34. THE END