The Hong Kong Mortgage Corporation's latest securitization offer will break new ground by selling bonds to the public. As much as half of the HK$2 billion ($256 million) mortgage-backed securities (MBS) offer will be made available to retail investors.
HSBC has been appointed sole bookrunner for the institutional offer and joint underwriter with Standard Chartered for the retail offer. The source adds that HSBC will form a small syndicate for both offers, which will be issued under the Bauhinia MBS programme.
The retail offer will comprise four fixed-rate tranches while the institutional offer will feature both fixed and floating rate securities. The deal is expected to launch before the end of October.
This is HKMC's third deal from the Bauhinia programme but the first to go on sale to the public. In fact, it is the first time that mortgage-backed notes have been sold to the retail market in Hong Kong, following a trail blazed by the government's HK$6 billion securitization of revenues from its tunnel tolls in May. That offer was also arranged by HSBC.
With this deal, and with a mandate for the Hong Kong Housing Authority's real estate investment trust also up its sleeve, HSBC continues its impressive track record of working for the Hong Kong government, and for government-linked companies, on asset-backed deals. But the bank is keen to stress that it is more than a one-trick pony - it is rumoured to have mandates in South Korea and in India, both of which could close this year according to one source.
To be sure, the HSBC asset-backed team is having its best year so far but the market is still producing too few deals to keep bankers happy. Indeed, Korea First Bank's mandate for a cross-border mortgage deal was awarded jointly to three banks - BNP, Calyon and RBS - last week, with rivals complaining of "very thin" fees.
But the number of deals in the pipeline, including a few cross-border offers from Korea, suggest the market is reviving. And HSBC has ensured, through the HKMC deal's retail tranche, that it will once again be in the headlines. Whether that translates into more mandates outside of Hong Kong is yet to be seen.