MTR Corp Ltd began marketing its first-ever Hong Kong dollar public bond offering on Tuesday, adding to an uptick of borrowing in the local currency debt market.
The Hong Kong government majority-owned public transport operator and property developer is looking to raise around HK$15 billion ($1.9 billion) via a multi-tranche debt offering, according to people familiar with the matter.
Orderbooks had topped HK$30 billion as of early Tuesday morning, said one of the people.
Most Hong Kong dollar-denominated bond offerings have historically been private placements or unlisted deals. Recently, though, a growing number of issuers have flocked to the public market as the currency’s status as a haven from the conflict in Iran has bolstered demand for the securities.
Corporate and government issuers have raised HK$34.1 billion from such publicly announced deals this year, a record for the period, according to Bloomberg-compiled data. Just last week, the International Bank for Reconstruction and Development, the World Bank’s lending arm, priced an HK$8 billion five-year note, the largest Hong Kong dollar-denominated public bond sold by an international issuer.
Issuance is driven by cheaper funding costs compared to the US dollar market, and strong “asset hungry” demand from investors, said Lei Zhu, head of Asian fixed income at Fidelity International.
In the near-term, safe‑haven flows into the market highlight its unique position: US dollar‑linked, yet shielded from Middle East conflict risk, with a longer-term shift toward the Hong Kong dollar as a global funding currency set to continue through the year, she added.
MTR has previously issued unlisted Hong Kong-dollar denominated notes, but they weren’t publicly syndicated, according to data compiled by Bloomberg. Its latest public bond sale comprises five-year, 10-year and 30-year notes, with initial price guidance around 3.2 percent, 3.65 percent and 4.3 percent, respectively, according to a person familiar with the matter.
The deal could be priced as early as Tuesday.
MTR’s offering followed similar deals from German development bank KfW and the Asian Infrastructure Investment Bank in January and a HK$3 billion deal from the African Development Bank in March.
Hong Kong dollar investments currently focus a lot on private placements and certificates of deposits, which are more buy and hold, said Anitza Nip, head of fixed income research for Asia at Union Bancaire Privée in Hong Kong. An increase in quality issuers could potentially improve liquidity of the market, she added.
