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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5 Goldman Sachs 218,838.41 733 5.38%

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1 BNP Paribas 46,136.68 182 7.00%
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4 Credit Agricole CIB 33,211.72 160 5.04%
5 SG Corporate & Investment Banking 32,419.80 126 4.92%

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3 Citi 9,716.40 55 6.32%
4 Morgan Stanley 8,471.86 53 5.51%
5 UBS 8,248.12 34 5.36%