The University of Hong Kong plans to raise USD 1 billion, becoming the leader in bond issuance among Hong Kong universities, expected to reduce reliance on government funding

The government will launch three plots of land in the North Metropolitan University Town for the development of subsidized universities and self-financing institutions. The University of Hong Kong, which plans to apply for land expansion, is paving the way for bond issuance through a non-deal roadshow (NDR) investor meeting organized by HSBC this week. HKU announced last night that it has signed a USD 1 billion medium-term note fundraising plan, which will allow it to issue bonds to meet funding needs. If the bond issuance goes ahead, HKU will become the first university in Hong Kong to raise funds through bond issuance, which is expected to reduce reliance on government funding. Some Legislative Council members indicated that HKU's bond issuance is a "confident" approach, and other universities may follow suit. HKU confirmed last night that it has signed a USD 1 billion medium-term note fundraising plan, which will allow it to issue bonds to meet funding needs, and stated that investors can contact HKU's Finance and Corporate Management Office for relevant information. Our newspaper's email inquiry has not received a response before the deadline. Investor Meeting Arranged Through HSBC According to foreign media reports, HKU is arranging investor meetings through HSBC on Wednesday and Thursday this week, and representatives from the university, including the Director of Finance and the Head of Debt Financing and Investor Relations, are expected to attend the NDR meeting. Local media also reported that institutional investors, including fixed-income traders, financial institutions, and hedge funds, have also been invited to participate. Chen Jialang, General Manager of FSMOne (Hong Kong), stated that the purpose of potential bond issuers holding an NDR is to reach out to potential investors and explore their interest. Potential issuers will also share their financial status and are expected to issue bonds shortly after the NDR, which is a market practice. Investors certainly want to understand the credit status of potential issuers and the yield levels of the bonds. If HKU proceeds with the bond issuance, it is believed to be investment-grade high-quality bonds suitable for investors seeking stable returns. He pointed out that referring to the 10-year bond yield issued by the Airport Authority at the beginning of last year, the yields for Hong Kong dollars and US dollars were approximately 3.1% and 4.5%, respectively. Therefore, if HKU issues bonds, the yield should be attractive only if it is higher than the Airport Authority's bond yield by 20 to 30 basis points. Legislators Describe Bond Issuance as a "Confident" Approach Legislative Council Education Affairs Committee Chairman Lau Chi-peng analyzed that in recent years, public finances have been tight, making it difficult for subsidized universities to apply for large amounts of funding, describing it as "not easy to get money." He also mentioned that the HKD 10 billion loan launched by the government for the North Metropolitan University Town may not be sufficient, stating, "10 billion cannot possibly be divided among just one or two schools; even if institutions receive it, they may only get around 2 to 3 billion. Regardless of which school enters, they must find ways to fill the gap." He continued to say that the resources allocated by the government to the eight universities in recent years have been less than the profits earned by the universities themselves, "rather than asking the government for loans, it is better to calculate and issue bonds, which is a viable option." Lau Chi-peng described HKU's decision to issue bonds as having "confidence," as HKU is the most financially robust institution among the eight universities and can afford it financially. "If they want to develop significantly in the North, the required investment will certainly be considerable, and besides building buildings, equipment is also very expensive." He does not rule out that HKU is "throwing a brick to attract jade" to attract other investors. He believes that HKU's approach has reference value for the preparation of the third medical school in Hong Kong's science and technology university, as well as for other institutions, but whether each school issues bonds depends on how the development plan in the North is carried out According to the financial report for the 2024/25 fiscal year released by the University of Hong Kong, a surplus of HKD 4.814 billion was recorded, an increase of over 20% year-on-year, the highest among the eight universities. The University of Hong Kong did not rule out bond financing at a recent media gathering during the Lunar New Year