All signed up: Monetary Authority Chief Executive Joseph Yam officiates at the signing ceremony for appointment of distributors for the Retail Exchange Fund Notes Programme.

Tender of two-year Exchange Fund Notes will be held on May 13 for settlement on May 17, the Monetary Authority says.

A total of $1.2 billion in two-year notes will be on offer, of which $300 million will be made publicly available through non-competitive tender.

If the amount of notes reserved for non-competitive tender is under-subscribed, the non-subscribed amount will be added to the portion of notes for competitive tender (initially set at $900 million).

The notes will mature on May 17 and will carry interest at 2.6% per annum payable semi-annually in arrears.

Safe, transparent instrument

The authority's chief executive Joseph Yam said Exchange Fund Notes are a safe, liquid and highly transparent instrument, adding they provide a steady stream of income that is usually higher than the interest on bank deposits.

"We believe retail investors will welcome this additional channel of investment, particularly with the refinements that have been made to the issuing, pricing and distribution arrangements," he said.

The authority said the public may submit non-competitive tender applications through Recognised Dealers, which are also appointed as Retail Exchange Fund Notes Distributors.

Competitive tender applications

Competitive tender applications for the notes may be made through any of the Market Makers or Recognised Dealers.

Competitive tender applications may also be submitted through brokers who are Exchange Participants of the Stock Exchange via Hong Kong Securities Clearing Company.

Securities Clearing will collect tender applications from its participants and submit them to the authority for processing.

While an applicant can apply for the notes through both competitive and non-competitive tenders, an applicant may submit only one non-competitive tender application through the same Retail Exchange Fund Notes Distributor.

Each tender must be for an amount of $50,000 or integral multiples thereof for both competitive and non-competitive tender.

For a list of Market Makers or Recognised Dealers, visit the authority's website. For enquiries call 2878 1465. The tender results will be published on the authority's website.