Hong Kong Monetary Authority to Auction HONIA-Indexed Floating Rate Notes

The Hong Kong Monetary Authority (HKMA), acting on behalf of the Hong Kong Special Administrative Region Government, has announced a tender for 1-year HONIA-indexed Floating Rate Notes. This auction, part of the Infrastructure Bond Programme, is scheduled for November 20, 2024, with settlement the following day, according to Hong Kong Monetary Authority.

Details of the Offering

The HKMA plans to offer HK$1.5 billion in 1-year HKD Notes, which will mature on November 21, 2025. These notes will feature interest payments tied to the Hong Kong Dollar Overnight Index Average (HONIA), with interest disbursed quarterly in arrears. The issuance is aimed exclusively at Primary Dealers, who are part of the Infrastructure Bond Programme, and applications must be made through these dealers. The minimum tender amount is set at HK$50,000 or its multiples.

Tender and Settlement Information

The tender will take place between 9:30 am and 10:30 am on November 20, 2024. The results will be publicly announced via the HKMA’s website, the Hong Kong Government Bonds website, Bloomberg, and Refinitiv by 3:00 pm on the same day. The notes are expected to commence trading on the Stock Exchange of Hong Kong Limited on November 22, 2024.

Interest Rate and Maturity

The notes will be issued at par and will mature in one year. The interest rate is pegged to the annualised compounded average of daily HONIA, plus the highest accepted spread at the tender, ensuring a minimum of 0% per interest period. The complete methodology for interest calculation is detailed in the Institutional Issuances Tender Information Memorandum available on the Hong Kong Government Bonds website.

Infrastructure Investment

Proceeds from the notes will be directed towards infrastructure projects, adhering to the guidelines set forth in the Infrastructure Bond Framework. This initiative underscores the HKMA's commitment to fostering sustainable development through strategic investment in infrastructure.