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The Hong Kong Mortgage Corporation Limited

Infrastructure Financing and Securitisation

The HKMC strives to develop financial products to fulfil its mandates, fill the market gaps and foster market development. The HKMC started in 2019 to implement the Infrastructure Financing and Securitisation (IFS) business, with the aim to:

  • further its mandate to promote the development of the local debt market and stability of the banking sector in Hong Kong;
  • fill the gap in the infrastructure financing market to facilitate infrastructure investment and financing flows; and
  • help consolidate Hong Kong’s position as an infrastructure financing hub and to benefit its financial and professional service sectors.

IFS acquires infrastructure loans from commercial banks on a primary and secondary basis, as well as co-finances infrastructure projects with multilateral development banks (MDBs) and commercial banks. The loan acquisition scope covers senior debt from greenfield and brownfield projects, including but not limited to conventional infrastructures such as power (conventional and renewable), electricity distribution / transmission, social infrastructure, telecommunication, transportation, and water desalination across the globe.


To further its mandate in developing local debt capital market and fostering the securitisation market development, the IFS targets to implement securitisation of infrastructure loan assets with a long-term goal to promote Infrastructure Loan Backed Securities (ILBS) as a standalone alternative asset class.


Infrastructure Loan Backed Securities (ILBS)


The ILBS, as an emerging asset class, aims to provide investors with exposure to a diversified portfolio of infrastructure loans across multiple geographies and sectors through publicly-rated infrastructure-related debt securities.

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The IFS Investment Committee (IFSIC) is the governing forum to manage the infrastructure investments. It is chaired by Mr. Howard Lee, Executive Director of the HKMC and Deputy Chief Executive of Hong Kong Monetary Authority.

IFS Investment Committee (IFSIC) voting members


The IFS Management Team manages the day-to-day execution of IFS business.

 IFS Management Team


From left to right:

  • Mr Keith LAU, Head of Portfolio Management
  • Mr Rolland LIM, Co-Head of Infrastructure Investment
  • Mr Mike CHENG, Chief Investment Officer (IFS)
  • Mr Calvin TAN, Co-Head of Infrastructure Investment
  • Mr Francis OR, Head of Infrastructure Risk
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Risk management

Apart from corporate governance and risk management framework of the HKMC, the HKMC operates on prudent commercial principles and robust risk management policies consistent with common market practices, based on the principle of “prudence before profitability”. The IFS Risk Management Guidelines is implemented to consider and control the key risks, such as credit risk, asset-liability mismatch risk, environmental and social risk, and compliance risk, throughout the investment process


Risk Management and (Environmental, Social and Governance) ESG Framework


To effectively manage the credit risk associated with the infrastructure loan investments, IFS business has developed prudent underwriting criteria and perform in-depth due diligence in-house with the assistance from independent consultants. All infrastructure investments have taken into consideration appropriate risks and returns, acceptable project risks and mitigation measures, and are also subject to ongoing monitoring and review. An internal credit rating methodology and a loss given default methodology (both developed by an external rating agency) are adopted to evaluate expected losses arising from infrastructure loan default.


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Environmental, Social and Governance (ESG) Standards

IFS Environmental and Social (E&S) Guidelines outlines the detailed risk management requirements and processes with respect to E&S related risks:


1promote environmentally and socially responsible infrastructure financing2Establish a structured approach to monitor and record borrowers’ performances
3Set out internal responsibilities and procedures on environmental and social (E&S) due diligence for any potential investment on infrastructure loan assets4Ensure that the E&S risks management processes of the IFS business is aligned with industry practices and those adopted by other market players



(Environmental, Social and Governance) ESG standards



Sector Guidelines:

  • Special sector guidelines provide guidance to address the risks, standards or additional requirements that are relevant to specific sectors of the projects.

Environmental and Social (E&S) Exclusion List:

  • The E&S Exclusion List includes activities which the HKMC will not knowingly finance nor invest in. The full E&S Exclusion List can be downloaded here.

E&S Categorisation:

  • Projects are categorised according to the magnitude of potential E&S risks and impacts they are exposed to. By adopting a risk-based approach, our due diligence, documentation, post-closing monitoring and reporting are commensurate with the categorised level of E&S risks and impacts.

E&S Screening and Scanning:

  • Using reputational risk screening tools, news search and other internet resources helps identify any potential red flags or signs of deterioration with respect to E&S risks early in the process.


The E&S Guidelines reflects international and local Hong Kong E&S standards, including among others, the Equator Principles adopted by project finance banks to assess and manage E&S risks in the projects. For transactions that are co-financed with Multilateral Development Banks, IFS also leverages on the safeguards adopted by these institutions to ensure rigor in the process. IFS carries out a risk-based general review based on best available information for transactions where the Equator Principles are not applicable, which may cover E&S Management System, E&S compliance and liabilities, and labour standards.


Governance risks associated with the borrowers and the projects are assessed and managed by the Compliance Guidelines, which seeks to:

  1.  ensure that due diligence has been conducted to consider and identify compliance risks and impacts related to the projects; 
  2. formulate approaches to manage and mitigate the potential compliance risks; 
  3. work with borrowers to continuously seek improvement on managing the governance risks, to the extent practicable; and
  4. monitor the implementation of the project and identify any potential changes to the governance related risks and impacts post-commitment.
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MoU banks

To promote infrastructure financing, the HKMC has entered into Master Cooperation Agreement with IFC, as well as memorandum of understanding (MoU)s with China Export & Credit Insurance Corporation and 20 commercial banks to strengthen its network and business operation.

MoU banks




  • Started to study the IFS business opportunities
  • Engaged an international reputable financial institution for an expert advisory service in relation to the business



  • Finalised the IFS business plan and obtained the Board of Director’s approval
  • Set up the IFS Division manned with experienced industry professionals




  • Commenced the implementation of the IFS business
  • Executed Master Cooperation Agreement with International Finance Corporation
  • Signed a Memorandum of Understanding with China Export & Credit Insurance Corporation (Sinosure) on infrastructure financing co-operation




  • Signed a Memorandum of Understanding (MoU) with MUFG Bank, Ltd. on Infrastructure Loan Sales Framework
  • Signed MoUs with 5 partner banks, Crédit Agricole Corporate and Investment Bank, HSBC, ING Bank, Natixis S.A., and Standard Chartered Bank, on Infrastructure Loans Framework




  • Signed MoUs with additional 14 partner banks on Infrastructure Loan Framework
  • Commencement of the Pilot Infrastructure Loan-Backed Securitisation process