The Hong Kong government will issue retail infrastructure bond worth HK$20 billion next month.

The three-year bond will be linked to inflation and offer a minimum guaranteed interest of 3.5 percent, to be paid every six months.

That's lower than the 4 percent for the latest round of silver bond offered by the government.

Speaking at a press briefing, executive director for external affairs for the Hong Kong Monetary Authority (HKMA), Kenneth Hui, said the interest for the retail infrastructure bond is still appealing to investors.

"When we set the interest rate, we do consider a combination of factors, including market conditions as well as the demand, as well as the interest rates of comparable products right now in the market," he said.

"All things considered, we feel that 3.5 percent is an attractive rate, particularly considering the latest interest rate trend in Hong Kong."

The HKMA said each lot is worth HK$10,000, and each investor will be allocated a maximum of 100 lots.

The subscription period will last from November 26 to December 6.

The bond will be issued on December 17 and listed on the local bourse the next day.

The proceeds will be used to finance infrastructure projects, including new towns and airport development.