Zhitong Finance App learned that on October 30, Hong Kong Mortgage Corporation Limited (Mortgage Securities Company) announced the successful issuance of the fourth batch of infrastructure loan collateral securities (Bauhinia 4). This offering is the mortgage securities company continuing to develop this asset class through regular issuance after issuing three batches of Bauhinia series securities between 2023 and 2025. The relevant offering provides professional investors with an opportunity to invest in diversified projects and infrastructure debts in different regions and industries.
Bao Ke-yun, executive director and president of Mortgage Securities, said, “This offering highlights the investment of mortgage securities companies in infrastructure financing business and support for Hong Kong's development as an infrastructure finance center. The strong demand from new and existing investors for the issued notes reflects the increasing market acceptance of infrastructure as an asset class.”
The launch of Bauhinia 4 was well received by new and existing investors. The investor base is very diverse, covering asset management companies, companies, family offices, financial institutions, hedge funds, insurance companies, pension funds, private banks and securities firms. There has also been an increase in the willingness of banks in Asian countries to invest.
The Asian Infrastructure Investment Bank (AIIB) continues to become an anchor investor and participate in the issuance of infrastructure loan collateral securities through its investment plan for infrastructure loan collateral securities totaling US$300 million from mortgage securities companies. The AIIB's investment plan continues to implement its goal of introducing private capital into the infrastructure industry.
The Bauhinia 4 portfolio involves a total of 42 infrastructure debts in 15 countries, 11 sub-sectors, and 32 separate projects, with a total value of approximately US$481.5 million. The three-year non-early redemption period for Bauhinia 1 has ended, and some of the assets in the Bauhinia 4 portfolio stem from the redemption of Bauhinia 1.
The notes were issued in five classes (A1-SU, Class A1, Class B, Class C and Class D), with a total value of US$457.3 million, and were listed on the Hong Kong Stock Exchange. As investors' interest and demand for mezzanine series notes increased, mortgage securities companies issued unrated D-grade notes, keeping the capital structure of related issuances continuing to be efficient. The mortgage securities company is the sponsor, collateral manager, and risk holder of this transaction.
Sustainability remains an important theme in the Bauhinia series of note issuance. Among them, US$128.5 million are sustainable financing notes (A1-SU grade) composed of assets with sustainable, green, and socially responsible elements. A1-SU notes are issued under the Mortgage Securities Company's “Social Responsibility, Green and Sustainable Finance Framework” and are in line with the International Capital Markets Association's Green Bond Principles, Social Responsibility Bond Principles, and Sustainable Bond Guidelines.
Standard Chartered Bank acted as the sole global coordinator for this offering. BNP Paribas, China International Finance Hong Kong Securities Limited, ING Bank Singapore Branch, Mitsubishi UFJ Securities Asia Limited, Nikko Securities (Hong Kong) Limited and Standard Chartered Bank acted as joint bookkeeping banks. Fubon Bank (Hong Kong) Limited and Haitong International Securities Group Limited are sub-underwriters.