HKMC’s second infrastructure loan-backed securities issuance
The Hong Kong Mortgage Corporation Limited (HKMC) announced today (11
September) the successful completion of its second infrastructure
loan-backed securities (ILBS) issuance. This is executed through a
special purpose vehicle (SPV), Bauhinia ILBS 2 Limited (Bauhinia 2)
and it follows the success of the HKMC’s first ILBS issuance in May
2023. The Bauhinia issuances offer professional investors exposure to
a diversified portfolio of project and infrastructure loans across
multiple geographies and sectors.
Mr Raymond Li, Executive
Director and Chief Executive Officer of the HKMC, said, “The success
of Bauhinia 2 issuance demonstrated investors’ growing interest in the
infrastructure loan asset class. The issuance further supports the
development of Hong Kong as an infrastructure financing hub,
facilitating inflow of market capital to high‑quality infrastructure
projects, and expanding the securitisation market in Asia. ”
Bauhinia 2 issuance received strong response from investors,
with some repeated investors showing increasing comfort with the asset
class and expanding their investment across a wider range of note
classes, and an expanded universe of investors joining this space. The
expanded investor base is well diversified, including insurers,
pension funds, security firms, and local and international financial
institutions.
Asian Infrastructure Investment Bank (AIIB),
through its US$300 million investment programme into the HKMC’s ILBS
issuance, participated in Bauhinia 2 as an anchor investor. AIIB’s
investment programme continues to fulfil its objective to mobilise
private capital into the infrastructure sector.
Bauhinia 2
has a portfolio of 28 project and infrastructure loans across 26
individual projects spreading across 14 countries and 10 sub-sectors,
with a total value of approximately US$423. 3 million. In total, five
classes of notes are issued (Class A1-SU, Class A1, Class B, Class C
and Class D), all of which are investment grade rated, with aggregate
principal of US$386. 7 million. The issued notes are listed on The
Hong Kong Stock Exchange. The HKMC acts as the sponsor, collateral
manager and risk retention holder of the transaction.
Within
the capital structure of Bauhinia 2, there is an US$107 million
sustainability tranche (Class A1-SU) backed by sustainable, green and
social assets. Class A1-SU is issued in accordance with the HKMC’s
Social, Green and Sustainability Financing Framework, which aligns
with the Green Bond Principles, Social Bond Principles and
Sustainability Bond Guidelines released by the International Capital
Market Association.
Standard Chartered Bank is the Sole
Global Coordinator. China International Capital Corporation Hong Kong
Securities Limited, ING Bank N. V. , Singapore Branch, MUFG Securities
Asia Limited, Natixis Hong Kong Branch and Standard Chartered Bank are
the Joint Bookrunners. Fubon Bank (Hong Kong) Limited and Korea
Investment & Securities Co. , Ltd. are the Co-Managers.
Annex: Major Terms of Bauhinia 2 The Hong Kong Mortgage
Corporation Limited 11 September 2024