Hong Kong US$2.7 billion infrastructure bond offering is undersubscribed

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The offering sees underwhelming investor demand, missing expectations

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The government attributed the lacklustre response to the bond offering to investors preferring to put their money into the Hong Kong initial public offering market. Photo: May Tse

Enoch YiuandAileen Chuang

Published: 11:02pm, 6 Dec 2024Updated: 1:23am, 7 Dec 2024

Hong Kong’s latest offering of HK$20 billion (US$2.7 billion) worth of infrastructure bonds has been undersubscribed, a signal that investors are unimpressed by the available returns.

Around 128,000 investors signed up for HK$17.85 billion worth of bonds during the offering period that began on November 26 and ended Friday, a government spokesman said. The final issuance size is expected to be HK$17.8 billion. All figures are preliminary and could be adjusted.

The government will announce the allocation results on December 13. The bonds will be issued on December 17 and will be listed on the stock exchange the following day.

A government spokesperson attributed the lacklustre response to investors preferring to put their money into the Hong Kong initial public offering market.

Together with the HK$55 billion that was raised from a Silver Bond offering in October, the government has raised a total of HK$72.8 billion over the past two months to finance infrastructure projects.

However, banks said investors bet on projects with stable returns.

“We have observed continued interest in the latest tranche of retail infrastructure bonds, particularly amid the ongoing interest rate-cut cycle,” a spokesman from HSBC, a co-arranger of the bond offering, said in a statement.