HONG KONG: The city's first sale of government bonds in five years attracted orders for 6.45 times the HK$3.5 billion ($452 million) on offer, after currency-market interventions left the city's banks with record amounts of cash.

The government sold two-year notes at an average yield of 0.59 percent, the Hong Kong Monetary Authority said yesterday. The highest accepted yield in the sale was 0.62 percent.

Lawmakers on July 8 approved a plan to sell HK$100 billion of bonds over the next few years to develop the local market and provide a more reliable benchmark for pricing company debt.

Banks have record amounts of cash to invest after the HKMA injected more than HK$250 billion in the first seven months of 2009 to prevent the local currency from strengthening beyond its fixed range.

Hong Kong's two-year Exchange Fund notes, local currency debt issued by the HKMA that soaks up liquidity in the financial system, yielded 0.52 percent yesterday.

Bloomberg News

(HK Edition 09/03/2009 page4)