The Hong Kong Mortgage Corp (HKMC) announced on Tuesday the issuance of multicurrency public benchmark bonds totaling HK$25.3 billion ($3.3 billion), marking its largest-ever public bond offering.

The four-tranche landmark issuance under the HKMC’s $30 billion Medium Term Note Programme surpasses its previous record set in October last year, when it launched HK$23.8 billion in social bonds, according to a statement from the Hong Kong Monetary Authority.

The multicurrency benchmark bonds comprise HK$10 billion in 2-year notes, 5 billion yuan ($705 million) in 3-year notes, and $1 billion in 5-year bonds in conventional format, along with HK$2 billion in 30-year social bonds.

“This landmark multicurrency bond issuance has further solidified Hong Kong’s position as Asia’s leading international bond issuance hub and the premier offshore renminbi business center,” said HKMC Executive Director Howard Lee Tat-chi, who is also deputy CEO of the Hong Kong Monetary Authority.

The issuance was well received by a diverse pool of high-quality local, Southbound Bond Connect, and international institutional investors, with a combined peak order book reaching HK$80 billion equivalent and final allocation made to around 250 accounts.

Investors included multilateral development banks, government funds, banks, insurance companies, the Mandatory Provident Fund and pension funds, asset management firms, and private banks.

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“The issuance further underscores the HKMC’s role in fostering the development of the public bond market across various currencies and tenors, paving the way for other issuers to better connect with local, Chinese mainland, and overseas investors,” Lee added.

Notably, the 30-year Hong Kong dollar social bond tranche is the first-ever social bond issuance in the Asia-Pacific region, with proceeds supporting the corporation’s Reverse Mortgage Programme that provides essential financing for the elderly in Hong Kong.

This program allows elderly homeowners to unlock the value of their properties to generate supplementary income, helping them maintain their quality of life during retirement.

As of October, the HKMC had received 8,776 applications. The average applicant was 69 years old, with an average property value of around HK$5.5 million, and an average monthly payout of HK$15,900.

HKMC’s Executive Director and CEO Colin Pou Hak-wan said, “This record-breaking bond issuance has proven to be highly effective in bringing new investors to the Hong Kong capital market.” He also said it demonstrates investor confidence in Hong Kong and the HKMC.

The inaugural social bond tranche dedicated to reverse mortgage loans not only promotes sustainable finance and financial inclusion for the elderly but also contributes to the development of the retirement planning market and the “silver economy” in Hong Kong, he added.

Lynn Song Lin, Hong Kong-based chief economist for Greater China at European bank ING, told China Daily that there has been “pretty strong demand” for recent bond issuances in Hong Kong.

He said that bonds have performed relatively well amid rising expectations of further rate cuts, as investors seek to lock in higher yields. Foreign currency-denominated bonds have also fared well, offering local investors opportunities to diversify their portfolios, Song said.

“Hong Kong’s bond market is also part of its role as a superconnector between the Chinese mainland and the rest of the world, connecting investors and issuers,” he added. “The increased issuance of renminbi bonds also increases the depth of the offshore renminbi market, offering more products for prospective investors.”

He further highlighted that the aging population in both Hong Kong and the mainland makes the “silver economy” a key strategic focus, with the development of innovative products tailored to this demographic trend expected to continue.

Contact the writers at s hamim@chinadailyhk.com