Hong Kong Mortgage Corp. (HKMC), the state-controlled secondary mortgage agency, last week launched the latest RMBS from its Bauhinia program. HSBC is arranger on the HK$2 billion deal, which is the first not to feature an unconditional guarantee by the borrower.

The need for this was negated by Moody's Investors Service recent upgrade of HKMC's long-term local credit rating from Aa3' to Aaa'. Moody's also applied the rating change to three existing RMBS transactions by the company dating back to 2003.

HKMC's latest deal is backed by a static pool of mortgages originated by Hong Kong Housing Authority - another state-linked institution - that were acquired by HKMC between 2001 and 2003.

The transaction offers four triple-A tranches with maturities of one, three, five and 11 years.

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