Hong Kong’s latest silver bond issuance offers a guaranteed minimum interest rate of 4.25 percent, up from 3.85 percent in the last batch.

The 11th batch of the three-year bond programme, open to residents born in or before 1967, carries a target issuance size of HK$50 billion, with the potential to go up to HK$55 billion depending on investor response, the government announced on Thursday.

Each unit is priced at HK$10,000, with a maximum allotment of 100 units – or HK$1 million – per subscriber.

Interest will be paid semi-annually at a rate tied to Hong Kong’s inflation.

Secretary for Financial Services and the Treasury Christopher Hui said the guaranteed rate of 4.25 percent was set after weighing several factors.

He drew comparisons with other products currently available, noting that 12-month time deposits are offering roughly 2 to 3 percent.

“Given the fact that it is a three-year tenor bond, we are of the view that our product is sufficiently attractive for the segment that we are targeting,” he said.

“In terms of the past record of reception, the issuance of our silver bonds has been very popular among the public.”

The banks tasked with distributing the bonds echoed that optimism.

Cheuk Wong, HSBC’s head of markets and securities services for Hong Kong, pointed to the product's strong track record, noting that last year’s issuance of HK$55 billion drew subscriptions exceeding HK$98 billion.

He also said the 4.25 percent guaranteed rate has already priced in expectations of future interest rate hikes.

Financial Secretary Paul Chan framed the issuance as a broader strategic move, stating in a statement that the bonds offer senior citizens a safe, steady and low-risk investment option while encouraging the financial sector to tap into the business potential of the city's growing silver economy.

Eligible subscribers can apply from August 21 to September 4 through one of the placing banks and designated securities brokers.

The bonds will be issued on September 15.

Proceeds from the issuance will be used to finance or refinance infrastructure projects under the Capital Works Reserve Fund.



Edited by Edmond Fong