To show its support for Hong Kong, the Mainland will buy Hong Kong Government bonds this summer, Premier Wen Jiabao says.

Speaking to reporters in Ireland on his visit to Europe, the premier said Beijing had decided on the amount but wouldn't reveal figures. Hong Kong plans to issue $20 billion in Government bonds in July.

Despite overwhelming response from institutional investors to its first-ever securitisation bonds offering, Secretary for Financial Services & the Treasury Fred Ma says the Government has no immediate plans to issue another.

The first batch, which was backed by revenues to be generated by Government-owned toll tunnels and bridges, was listed on the stock exchange on May 10.

Gov't committed to developing local bond market

Speaking in the Legislative Council today, in reply to a question from lawmaker Ambrose Lau, Mr Ma said the focus now is to plan for the issue of Government Bonds within 2004-05.

"The Government is committed to developing the local bond market to consolidate Hong Kong's position as an international financial centre," Mr Ma said.

It was, he noted, the largest securitisation bond offering ever in Hong Kong, and among the largest in the region. It was also the first securitisation bond offering to local retail investors, distributed through the largest retail distribution network ever established for a bond issue in Hong Kong.

More than 800 branches of 23 placing banks were involved, along with 89 brokers who participated through the exchange's Central Clearing & Settlement System.

Invaluable experience gleaned from first exercise

Mr Ma said the Government has gained invaluable experience from this offering. It learned that Hong Kong investors in general are keenly interested in retail bonds.

"Their oversubscription by more than two times reflects the significant development potential of the local retail bond market. This has important implications for the Government and other public and private entities when deciding their future financing plans," he said.

"Response from institutional investors to this offering was overwhelming and the notes were oversubscribed by three times, indicating their demand for this type of bonds."

Mr Ma added the Government will build on the experience to implement the plan to issue Government Bonds and widen the distribution network.

"This will further develop our bond market and encourage private entities actively to consider bond issuance as a funding alternative. Ultimately, this will propel forward the development of Hong Kong's financial industry and even our economic development as a whole."