Banks Back Silver Bond's 4.25% Rate as Attractive Amid Market Volatility
RTHK · 2 SOURCESabout 23 hours ago2 MIN
Summary
The Hong Kong government has issued a new batch of silver bonds with a maximum issuance amount of HK$55 billion and a guaranteed interest rate of 4.25%, up from 3.85% in the previous batch. The bonds, available to Hong Kong residents born in 1967 or earlier, will be issued on September 15 after a subscription period from August 21 to September 4.
Key Points
- The silver bonds carry a 3-year tenor with minimum investment of HK$10,000 per hand and semi-annual interest payments, capped at 100 hands per person.
- HSBC's head of capital markets and securities services Wong Tsz-cheuk estimates US rate hikes of 25-50 basis points, making the 4.25% guaranteed yield attractive versus 1-2 year HKD bond yields of 2.8-2.9%.
- BOC Hong Kong's general manager of personal financial products Chow Kwok-cheong notes current time deposit rates hover around 3%, rendering the 4.25% rate reasonable and appealing.
- Chow anticipates over 300,000 applicants this year given geopolitical tensions and market volatility driving demand for stable, predictable returns with full principal protection.
- The previous batch attracted over HK$98 billion in subscriptions against a HK$55 billion issuance, indicating strong retail investor appetite.
Why It Matters
The elevated guarantee rate and banks' endorsement signal the government's commitment to providing secure investment options for Hong Kong's aging population amid uncertain global financial conditions, with the product's redeemable feature offering additional flexibility for risk-averse elderly investors.
The elevated guarantee rate and banks' endorsement signal the government's commitment to providing secure investment options for Hong Kong's aging population amid uncertain global financial conditions, with the product's redeemable feature offering additional flexibility for risk-averse elderly investors.