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Published: 20:12, August 09, 2022 | Updated: 16:02, August 11, 2022
HK: Latest batch of Silver Bonds to provide 4% guaranteed return
By Oswald Chan
Published:20:12, August 09, 2022 Updated:16:02, August 11, 2022 By Oswald Chan

An elderly man wearing a face mask does exercise in Ma On Shan in Hong Kong, March 7, 2022. (PHOTO/XINHUA)

HONG KONG - The Hong Kong Special Administrative Region's government announced the issuance of a seventh batch of Silver Bond worth between HK$35 billion ($4.46 billion) and HK$45 billion. With a three-year tenor, the bonds will offer a guaranteed return rate of 4 percent to investors. 

READ MORE: HK's new Silver Bonds to target more seniors

The target issuance size of the seventh batch of Silver Bond is HK$35 billion, though the government may exercise its discretion to increase the issuance size to a maximum of HK$45 billion. Hong Kong residents who turn 60 in or before 2023 and who hold a valid Hong Kong identity card will be eligible for subscription, according to the government statement on Tuesday.

Hong Kong residents who turn 60 in or before 2023 and who hold a valid Hong Kong identity card will be eligible for subscription

The current issue of Silver Bond will be offered at HK$10,000 per unit with a tenor of three years. Bondholders will be paid interest once every six months at a rate linked to the inflation rate in Hong Kong subject to a minimum rate of 4 percent, which is higher than the minimum rate of 3.5 percent of the sixth batch issued in August last year.

“Silver Bond offers senior citizens a safe and reliable investment option with steady returns amid an uncertain investment environment. Both the target issuance size and the maximum issuance size, as well as the minimum interest rate of this issuance, are higher than those of our previous issuances, which would help promote greater participation by senior citizens,” Financial Secretary Paul Chan Mo-po said in the statement.

There will be no secondary market for Silver Bond as bond investors may sell their bonds before maturity to the government at par together with accrued but unpaid interest. A maximum allocation amount of HK$1 million per investor will be imposed, meaning that each investor will be allocated 100 units of retail bonds at most.

The subscription period will start on Aug 23 and end on Sept 2. Bonds will be issued on Sept 14.

“Amid the uncertain market situation, the guaranteed 4 percent return will be attractive to investors so that we anticipate the market response of this issuance will be positive. We recommend eligible residents to hold the bond investment until maturity,” Hong Kong Monetary Authority Executive Director (Monetary Management) Clara Chan said in the news conference. 

ALSO READ: Rush seen for latest silver bonds

“We have made the bond issuance arrangement referenced to previous bond issuance experience, current financial market situation and the recovery pace of the financial market. We hope this issuance will propel the development of the local bond market and enhance market confidence,” Chan added.

In announcing the 2022-23 Budget in February, the finance chief announced that the SAR administration will issue Silver Bond this year, with a view to offering senior citizens an investment option with steady returns. According to Census and Statistics Department data, there will be 2.1 million senior citizens eligible for subscribing to the Silver Bond.

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