The Hong Kong Mortgage Corporation Limited (HKMC) successfully completed its first issuance of infrastructure loan-backed securities under the pilot scheme on infrastructure financing securitisation
The Hong Kong Mortgage Corporation Limited (HKMC) announced it issued the first infrastructure loan-backed securities under the corporation’s pilot scheme on infrastructure financing securitisation.
Infrastructure loan-backed securities (ILBS), as an emerging asset class, aim to provide investors with exposure to a diversified portfolio of infrastructure loans across multiple geographies and sectors through publicly-rated infrastructure-related debt securities.
The securitisation is executed through a special purpose vehicle (SPV), Bauhinia ILBS 1 Limited (Bauhinia 1). The SPV has an over $400-million-worth portfolio of 35 project and infrastructure loans in 25 individual projects spanning across 12 countries and 9 sectors.
The successful issuance of Bauhinia 1 is an important step towards developing an infrastructure financing securitisation platform in Hong Kong. It is expected to help the local infrastructure financing market become more vibrant and diversified, facilitating the inflow of market capital to high‑quality infrastructure projects. This way, Hong Kong gets an opportunity to “become the premier overseas financing platform under the national Belt and Road Initiative,” says Mr Paul Chan, the Financial Secretary.
There will be five investment-grade-rated classes of notes to get issued, with a total aggregate principal of $ 364.4 million.
Besides focusing on infrastructure, there is a $100 million sustainability tranche (Class A1-SU) backed by sustainable, green and social assets within the capital structure of Bauhinia 1, demonstrating the HKMC’s commitment to green and sustainable development.
The HKMC acts as the sponsor, collateral manager and risk retention holder of the security purchase. Asian Infrastructure Investment Bank (AIIB) also participated in this issuance as an anchor investor.
ING Bank, MUFG Securities Asia Limited and Standard Chartered Bank are the Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners of the offering. Fubon Bank (Hong Kong) Limited is the Co-Manager of the offering.
The issued notes are already listed on The Hong Kong Stock Exchange.