The Hong Kong Mortgage Corp. completed its fourth sale of infrastructure loan-backed securities on Oct. 30, issuing US$457.3 million of notes against a US$481.5 million pool of project loans, the largest portfolio in its Bauhinia series so far.

The deal matters for Asian fixed-income investors because it is one of the few ways to buy diversified, rated exposure to project and infrastructure loans in a listed bond format. Banks in the region also gain an outlet to sell down long-dated loans and free up balance sheet for new lending. The government-owned mortgage corporation is trying to turn the structure into a regular asset class, and the fourth deal in four years shows that schedule is holding.

What Bauhinia 4 holds

The portfolio contains 42 infrastructure debt obligations spread across 32 projects in 15 countries and 11 sub-sectors, according to the Hong Kong Monetary Authority, which published the announcement. Part of the pool came from the redemption of Bauhinia 1, the 2023 debut deal, which reached the end of its three-year non-call period.

The notes were issued in five classes plus subordinated notes, according to a term sheet attached to the release. The two senior classes carry Aaa (sf) ratings from Moody's: a US$128.5 million sustainability tranche (Class A1-SU) and a US$242.2 million Class A1. Below them sit a US$46 million Class B rated Aa2 (sf) and a US$18 million Class C rated A3 (sf).

The structure changed lower down. The mortgage corporation sold a US$22.6 million Class D without a credit rating, citing continued demand for the mezzanine tranche, and said this allowed it to keep the capital structure efficient. In last year's Bauhinia 3, Class D was a US$16 million tranche rated Ba1, which the corporation described at the time as the first non-investment-grade class of its kind in Asia, The Asset reported. Another US$24.2 million of subordinated notes in Bauhinia 4 is also unrated.

All the notes are listed on the Hong Kong Stock Exchange. The issuer is a Hong Kong special purpose vehicle, and the mortgage corporation acts as sponsor, collateral manager and risk retention holder.

Steady growth across four Bauhinia deals

Each deal has been larger than the one before. The first, in May 2023, pooled about US$404.8 million of loans, according to Clifford Chance, which advised on the first two deals. Bauhinia 2 in September 2024 held about US$423.3 million across 26 projects in 14 countries, and Bauhinia 3 in October 2025 held about US$450.5 million across 28 projects in 12 countries, according to the HKMA. Bauhinia 4's pool is about 7% larger than its predecessor's.

The sustainability slice has grown in step, from US$107 million in Bauhinia 2 and US$117 million in Bauhinia 3 to US$128.5 million this time. It is backed by green, social and sustainable assets and follows the corporation's financing framework, which it says is aligned with International Capital Market Association principles.

The Asian Infrastructure Investment Bank again acted as an anchor investor through its US$300 million investment program. The mortgage corporation said both new and returning buyers took part, including asset managers, insurers, pension funds, hedge funds, family offices and private banks, and that appetite was rising among banks across Asian countries. It did not disclose pricing, spreads or order book size.

Colin Pou, executive director and chief executive of the corporation, said in the release that demand showed the market's “growing recognition of the infrastructure asset class.” He tied the deal to Hong Kong's ambition to become an infrastructure financing hub, part of a wider push to deepen the city's capital markets that has also lifted Hong Kong IPO fundraising to a record pace this year.

Banks and bookrunners

Standard Chartered Bank was sole global coordinator, as on the earlier deals. Joint bookrunners were BNP Paribas, China International Capital Corp. Hong Kong Securities, ING Bank's Singapore branch, MUFG Securities Asia, SMBC Nikko Securities (Hong Kong) and Standard Chartered. SMBC Nikko is a new name on the bookrunner list compared with Bauhinia 3. Fubon Bank (Hong Kong) and Haitong International Securities Group were co-managers.

Linklaters, Simmons & Simmons and Clifford Chance were legal counsel, DB Trustees (Hong Kong) is trustee, and Deutsche Bank's Hong Kong branch is transaction administrator, the term sheet showed.

Bauhinia 1's redemption after three years shows how the series recycles loans into new deals. Bauhinia 2, issued in 2024, turns three in 2027.