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HK sees role as infrastructure financing center

Li Xiang
Updated: Dec 22,2017 10:21 AM     China Daily

Hong Kong is seeking to develop itself into a major infrastructure financing center, taking advantage of the corporate fundraising demand under the Belt and Road Initiative as well as international investors’ interest in infrastructure projects, a senior monetary official from Hong Kong said on Dec 21.

China Development Bank announced on Dec 20 the issuance of a five-year Belt and Road bond in Hong Kong, raising $350 million to fund B&R-related projects. It was the first mainland bank to sell such a bond in Hong Kong.

“This first ever issuance of a Belt and Road bond by CDB has a demonstration effect and underscores the pivotal role that Hong Kong can play in facilitating the financing of infrastructure projects,” Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, said at a media briefing in Beijing.

The HKMA is also actively facilitating infrastructure financing through equity investment and institutional investors such as sovereign wealth funds and pension funds, have expressed interest, according to Chan.

“Hong Kong can be the platform that helps diversify the financing source for the mainland’s companies and supports their international expansion by introducing overseas investors as shareholders of their projects,” Chan said.

The HKMA chief added that infrastructure projects under the B&R Initiative tend to offer higher returns than those in developed countries which could be an appealing factor for international investors.

The HKMA established the Infrastructure Financing Facilitation Office last July, an official platform that aims to facilitate infrastructure investment and financing. As of today, the IFFO has 78 partners including multilateral financial institutions, banks, insurance companies, asset managers as well as professional service firms, according to the HKMA.

Experts have pointed out that Hong Kong needs to further develop a more active bond market with deeper liquidity to boost its attractiveness as a financing and investment platform because infrastructure-related bonds often have a relatively longer duration which may discourage investment.