Demand for URA Bonds Surpasses Expectations in Hong Kong's Public Market

Demand Exceeds Supply in URA Bond Issuance

The Urban Renewal Authority (URA) achieved remarkable results with its recent bond issuance, raising HK$12 billion (approximately US$1.54 billion). The offering was oversubscribed, receiving over HK$22.8 billion in orders from a diverse range of institutional investors, including banks, asset managers, and insurance companies.

Details of the Bond Offering

• Issued tranches include:
  • HK$4 billion with a three-year tenor
  • HK$5 billion with a five-year tenor
  • HK$3 billion with a ten-year term
• This issuance represents the URA's first in the Hong Kong dollar public institutional bond market since 2009.
• The issuer noted this offering is one of the largest joint Hong Kong dollar bond offerings in the city.
• Coupon rates ranged between 3.35% and 3.55%, marking the lowest yields for such offerings in over two years.

Funding Urban Renewal Projects

The proceeds from the bond issuance are earmarked for capital expenditures linked to urban renewal projects in Hong Kong.

Challenges Facing the URA

Despite the successful bond offering, the URA faces fiscal challenges, including a projected annual deficit of HK$3.9 billion for the 2023-24 financial year. The authority's financial strain includes a HK$3.1 billion provision for potential project devaluation.

Future Redevelopment Initiatives

The URA has plans to promote redevelopment projects in Kowloon City, Sai Ying Pun, and To Kwa Wan in the coming years.

Key Underwriters

Notable underwriters for the bond issuance include Bank of China (Hong Kong), Crédit Agricole, HSBC, Standard Chartered, and UBS.