HK Swappers Eye Longer-Tenor Benchmark

Fixed-income derivative shops in Hong Kong are anticipating the launch of a 15-year government benchmark bond in the coming months, which is expected to boost trading in longer-dated interest-rate swaps.

  • 29 Sep 2006
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Fixed-income derivative shops in Hong Kong are anticipating the launch of a 15-year government benchmark bond in the coming months, which is expected to boost trading in longer-dated interest-rate swaps. "This will help increase liquidity in the longer end of the swap curve," said a senior rates trader at a bulge bracket house.

The Hong Kong Monetary Authority is discussing adding a 15-year Exchange Fund Note to its existing program, which extends out to 10 years. The new issue--expected by year-end--would boost the depth of the domestic fixed-income market. With a benchmark reference rate in place, the trader expects trades in 15-year swaps to take off. The first 15-year swap was launched in the interdealer market back in 2004 (DW, 5/9/04) but activity has mainly been limited to 10- versus 15-year curve plays rather than outright positions.

Hing-Fung Wong, spokesman at the HKMA, said it has been in consultation with market participants regarding a possible bond launch and is now finalizing the feedback received, declining further comment.

  • 29 Sep 2006

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4 Barclays 76,858.25 273 6.58%
5 HSBC 63,992.87 304 5.48%

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5 Citi 3,183.28 8 4.38%

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4 Bank of America Merrill Lynch 1,345.53 6 8.01%
5 UBS 1,083.08 5 6.45%