Hong Kong Mortgage Corp Plans Infrastructure Funding Next Year

(Bloomberg) -- Hong Kong Mortgage Corp., the city’s government-backed home-loan insurer, plans to diversify into infrastructure financing next year.

HKMC will first buy loan assets from banks and multilateral lenders and eventually look to securitize the assets, the organization said in an emailed statement Wednesday. “The business scope covers greenfield and brownfield projects globally, and will not be confined to Belt and Road projects,” it said.

While HKMC didn’t offer a specific timeline on when it could start long-term infrastructure funding, the move coincides with China’s ambitious plan to build railways, roads, ports, and power grids along the old Silk Road trading route to Europe. The project -- known as the Belt and Road initiative -- is seen as key to wrest geopolitical influence in a region where some say the U.S. is in retreat.

Norman Chan, chief executive of the Hong Kong Monetary Authority that owns HKMC, had flagged the plans in an Oct. 15 speech. He said that while infrastructure financing can be complicated, such investments can offer steady long-term cash flow and good returns.

The step widens HKMC’s mandate beyond home ownership in Hong Kong, the world’s least affordable housing market. The organization, which also supports the city’s debt market and small companies, said its profit climbed to HK$806 million ($103 million) in 2017 from HK$603 million the previous year, though the capital adequacy ratio fell slightly to 21 percent.

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