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The Mortgage Corporation has issued $1 billion in mortgage-backed securities. Since 1999, the corporation has originated a total of $11.2 billion in securities issued under its Mortgage-Backed Securitisation Programme.
The $1 billion mortgage-backed securities issued today are collateralised by a pool of mortgage loans purchased from the Housing Authority over the past few years.
It is divided into two classes of notes in an amount of $400 million for Class A-1 notes and $600 million for Class A-2 notes. The Class A-1 notes carry a fixed rate coupon of 4.73% and have a bullet maturity of 3 years. It caters for investors who wish to avoid prepayment risk on the notes and prefer a stable return on their investment.
The Class A-2 notes carry a floating rate coupon of 1-month HIBOR +0.18% and have a fast pay feature to absorb all excess repayment and prepayment of the whole underlying mortgage pool during the first three years. The Class A-2 notes cater for investors who can accept a higher prepayment exposure in return for a higher investment yield.
Both classes carry the corporation's guarantee on the timely repayment of principal and interest. They will therefore qualify for 20% capital risk weighting under the Banking Ordinance. The mortgage-backed securities issue will be cleared through the Central Moneymarkets Unit operated by the Monetary Authority.
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