Hong Kong’s Urban Renewal Authority (URA) on its triple-tranche HK$12 billion ($3 billion) senior bonds offering under its medium-term note (MTN) programme. The offering is one of the largest Hong Kong dollar-denominated note issuances to date and marks URA’s return to the Hong Kong dollar public institutional bond market since 2009.
The offering comprises three tranches: HK$4 billion at 3.35% over three years, HK$5 billion at 3.45% over five years, and HK$3 billion at 3.55% over 10 years. The proceeds from the offering will fund the capital expenditure on urban renewal projects and for general corporate purposes, according to a statement from the URA.
It is one of the largest ever joint HKD bond offerings, and the largest ever 5-year and 10-year HKD tranches in the capital markets of Hong Kong. The yields on these bonds are also the lowest in the HKD public offering market in the past two and a half years, according to the URA.
Local and overseas investors, including banks, asset managers, corporations, insurance companies, hedge funds, central banks, official institutions, family offices and private banks, with a peak combined orderbook of over HK$22.8 billion, representing an oversubscription rate of around two times.
Clifford Chance helped advise the URA on the deal, and the law firm’s lead partner Mark Chan said in a statement, “This transaction not only represents one of the largest Hong Kong dollar-denominated issuances to date but also underscores the robust liquidity of the HKD market and the strong positive sentiment from investors, as evidenced by the offering being significantly oversubscribed.”
Hong Kong-based Chan, who was supported by senior associate George Mok and associate Christine Chan on the deal, added: “It’s a testament to the confidence in URA’s vision and the resilience of the Hong Kong financial market.”
According to a Hong Kong Stock Exchange (HKEX) announcement, the arrangers for the bond were HSBC and Standard Chartered Bank (Hong Kong).
The dealers for the bond issuance were: ANZ; Bank of China (Hong Kong); Bank of Communications (Hong Kong); Barclays Bank; BNP Paribas; Citigroup Global Markets; Crédit Agricole Corporate and Investment Bank; DBS Bank; Deutsche Bank (Hong Kong); Goldman Sachs (Asia); HSBC; Industrial and Commercial Bank of China (Asia); JP Morgan Securities (Asia Pacific); Merrill Lynch (Asia Pacific); Mizuho Securities Asia; Morgan Stanley & Co. International; Standard Chartered Bank (Hong Kong); and UBS Hong Kong Branch.
Hong Kong sees tough property market
The URA was established in May 2001 under the Urban Renewal Authority Ordinance as the statutory body to help promote and facilitate the urban renewal of Hong Kong, and especially to improve the living conditions of residents in older districts such as Mong Kok East.
However, the riots and pandemic have caused difficulties for Hong Kong’s property market, and the governmnet backed URA has been losing money over the last few years. In the year ending March 31, 2024 it lost HK$3.9 billion, following a loss of HK$3.5 billion the year before.
Late last year the URA suffered a HK$1.5 billion loss from the sale of a project in Kowloon.
Other Hong Kong developers have been struggling amid a tough property market in the Special Administrative Region (SAR), with New World Development set to announce its first loss in 20 years for the year ending June 30, 2024. The loss could be as high as HK$20 billion as it revalued many projects.
Amid the gloom, there are small signs of optimism with expats and international firms gradually returing to the SAR. One notable real estate deal has been Four Seas Mercantile Holdings agreeing to buy two floors of office space, 25,000 square foot, in The Vision in Kowloon for HK$205.4 million, according to a HKEX announcement.
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