The HKMC strives to promote the development of the mortgage-backed securities (MBS) market in Hong Kong. MBS is an effective financial instrument that can channel long-term funding from the debt market to supplement the need for long-term financing generated by mortgage loans. Banks and financial institutions can make use of MBS to manage risks inherent in mortgage loans, such as credit risks, liquidity risks, interest rate risks and asset-liability maturity mismatch risks.
A deep and liquid MBS market can help enhance the development of an efficient secondary mortgage market and further promote Hong Kong as an international financial centre.
Bauhinia Mortgage-Backed Securitisation Programme
The HKMC established the multi-currency, conventional bond style Bauhinia Mortgage-Backed Securitisation Programme (Bauhinia Programme). The issuer, Bauhinia MBS Limited (Bauhinia), is a bankruptcy-remote special purpose company formed by the HKMC for the purpose of issuing MBS. From time to time the HKMC will sell mortgage loan portfolios to Bauhinia, which will be packaged into MBS of different series for investors. The HKMC acts as seller, master servicer and transaction administrator under the Bauhinia Programme.
The Bauhinia Programme enables the HKMC to arrange issues in different currencies. It adopts a bond style structure under which the interest amount payable on the coupon date is pre-determined and known to investors. It will facilitate the trading of the MBS and hence enhance their liquidity in the secondary market. The Bauhinia Programme also features flexible offering mechanisms that cater to both public issues and private placements.
The Bauhinia Programme is a major milestone in the development of the secondary mortgage market in Hong Kong. Through standardisation of product structure and documentation, the Bauhinia Programme provides a platform for both the HKMC and banks to conveniently convert their illiquid mortgage portfolios into liquid MBS, thereby achieving their funding and balance sheet management objectives.
Bauhinia Programme Arranger and Dealers
(Last updated in December 2005)
Merrill Lynch International
Barclays Bank PLC
Citicorp International Limited
DBS Bank (Hong Kong) Limited
Deutsche Securities Limited, Hong Kong Branch
The Hongkong and Shanghai Banking Corporation Limited
J.P. Morgan Securities (Asia Pacific) Limited
Merrill Lynch International
The HKMC will consider applications for Dealers under its Bauhinia Programme Interested banks or financial institutions are welcome to submit their applications to the Treasury Department of the HKMC for consideration.
Structure of the Bauhinia Programme
Retail MBS Issue & Prospectus
For detail of retail MBS issue & prospectus, please download from the link below: