Silver Bonds: Hong Kong gets HK$62.6 billion of bids from record number of subscribers seeking inflation-beating returns

Name: SCMP
Telephone: +852-2680-8888

The HK$45 billion inflation-protected bonds guarantee at least a 4 per cent annual coupon, a variable target pegged to the city’s inflation rate

Consumer prices rose 1.9 per cent in July, the most this year; it is the biggest jump since May 2020, if subsidies and one-off relief measures are removed

Reading Time:3 minutes

Why you can trust SCMP

Officials from the Hong Kong Monetary Authority and bank arrangers conduct a media briefing on August 9. Photo: K. Y. Cheng

Enoch Yiu

Published: 7:00pm, 2 Sep 2022Updated: 10:03pm, 2 Sep 2022

Hong Kong will sell a record HK$45 billion (US$5.73 billion) of inflation-protected bonds, attracting the highest number of applications after the government raised the coupon to compensate for the biggest jump in underlying consumer prices in more than two years.

The treasury received HK$62.64 billion of bids for the HK$35 billion of three-year notes known as Silver Bonds on offer, a government spokesperson said on Friday. It boosted the offering size to HK$45 billion to meet the excess demand.

The bids came from 290,000 subscribers, 13 per cent more than last year when 257,000 senior citizens lodged a record HK$67.9 billion of bids for HK$30 billion of notes on sale. The number of applications and the final issue size are the highest since the government began selling the securities in 2016.

The latest batch of Silver Bonds will pay a guaranteed interest rate of at least 4 per cent annually, a variable target pegged to the city’s inflation rate. It is a step up from the 3.5 per cent rate in the 2021 series, and compares favourably with a one-year time deposit rate of 2 to 3 per cent offered by local commercial banks.

04:23

Hong Kong’s Finance chief on property market and city’s new Strategic Tech Fund

The government opened the sale on August 23 through more than 20 banks and brokers, and stopped taking orders at 2pm local time on Friday. There are about 2 million eligible citizens born in or before 1963, and each buyer is restricted to a maximum allocation of HK$1 million. The final allotment will be announced on September 9, before the bond will be issued on September 14.