The Hong Kong Mortgage Corporation Successfully Issues Fourth Batch of Infrastructure Loan-Backed Securities, with Total Portfolio Debt of Approximately US$481.5 million

On 30 October, The Hong Kong Mortgage Corporation Limited (HKMC) announced the successful issuance of the fourth batch of infrastructure loan-backed securities (Bauhinia 4). This issuance follows the three Bauhinia series issuances by the HKMC between 2023 and 2025, continuing its regular issuance approach to develop this asset class. The issuance provides professional investors with opportunities to invest in diversified projects and infrastructure debt across different regions and sectors. Mr. (Bau Pak Wan), Executive Director and Chief Executive Officer of the HKMC, said: "This issuance demonstrates the HKMC's commitment to the infrastructure financing business and its support for Hong Kong's development as an infrastructure financing hub. The strong demand from both new and existing investors for the notes issued reflects the growing market recognition of infrastructure as an asset class." The issuance of Bauhinia 4 received an enthusiastic response from both new and existing investors. The investor base is highly diversified, covering asset management companies, corporations, family offices, financial institutions, hedge funds, insurance companies, pension funds, private banks and securities firms. Investment appetite from banks across Asian countries has also increased. The Asian Infrastructure Investment Bank (AIIB) continues to be an anchor investor in the HKMC's infrastructure loan-backed securities issuance through its total US$300 million investment programme in the HKMC's infrastructure loan-backed securities. The AIIB's investment programme continues to pursue its objective of bringing private capital into the infrastructure sector. The Bauhinia 4 portfolio involves a total of 42 infrastructure debt obligations across 15 countries, 11 sub-sectors and 32 separate projects, with a total value of approximately US$481.5 million. The three-year non-call period of Bauhinia 1 has ended, and part of the assets in the Bauhinia 4 portfolio originated from the redemption of Bauhinia 1. The notes issued are divided into five classes (Class A1-SU, Class A1, Class B, Class C and Class D), with a total value of US$457.3 million, and are listed on The Stock Exchange of Hong Kong Limited. With increasing investor interest and demand for mezzanine series notes, the HKMC issued unrated Class D notes, keeping the capital structure of the relevant issuance efficient. The HKMC acted as arranger, collateral manager and risk retention holder for this transaction. Sustainability remains an important theme of the Bauhinia series note issuances, with US$128.5 million comprising sustainable financing notes (Class A1-SU) backed by assets with sustainable development, green and social responsibility elements. The Class A1-SU notes were issued under the HKMC's Social Responsibility, Green and Sustainable Finance Framework, and are aligned with the International Capital Market Association's Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines. Standard Chartered Bank acted as the sole global coordinator for this issuance. BNP Paribas, China International Capital Corporation Hong Kong Securities Limited, ING Bank N.V. Singapore Branch, MUFG Securities Asia Limited, Nikko Securities (Hong Kong) Limited and Standard Chartered Bank acted as joint bookrunners. Fubon Bank (Hong Kong) Limited and HAITONG INT'L Securities Group Limited acted as co-underwriters.