Institutional investors jump on Hong Kong's tunnel deal

The HK$6bn professional tranche of the Hong Kong Link 2004 offer prices tight thanks to strong demand.

Investors have snapped up the institutional tranches of Hong Kong's HK$6 billion $769 million tunnel securitization despite it being priced at the bottom of the expected range. And the order book for the ground-breaking retail tranches is also comfortably over-subscribed.

The offer, which securitizes toll revenue from five tunnels and the Lantau Link, is unparalleled in the region and, in some respects, the world. These asset-backed bonds, typically a specialist product bought by professional investors and disregarded by just about everyone else, will be listed on the local stock exchange and sold to the public. Moreover, this will be the government's first securitization offer and, in effect, the first time it has...

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