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Hong Kong’s Silver Bonds lure senior citizens as government promises to pay seven times more than banks in annual interest

  • Subscriptions for the inflation-protected bonds this year far exceed that recorded for four previous issues
  • The product is available to those born in or before 1956, and pays as much as 3.5 per cent coupon annually

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The Silver Bonds will be distributed round by round if the overall subscription exceeds HK$15 billion, to ensure applicants for small numbers are served first. Photo: Felix Wong
Yujing Liu
Hong Kong’s inflation-protected bonds for senior citizens have received an overwhelming response after the government promised to pay the highest coupon on the securities since they were first introduced to retail investors in 2016.
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The three-year bonds will pay the higher of 3.5 per cent or the average consumer-price inflation, a sweetener for residents in an economy facing its worst slump in economic activity and employment. The annual coupon is seven times more than the average rate on time deposits.

Investors bid for HK$43.3 billion (US$5.6) worth of Silver Bonds, far exceeding the bids for its previous four issues carrying 2 to 3 per cent coupon sold from 2016 to 2019, according to preliminary results released by the government on Friday. The government will sell HK$15 billion of them, raising the size from an initial HK$10 billion. Subscriptions ended at 2pm local time on Friday.

About 140,000 people applied for the bonds, which are meant for permanent residents born in or before 1956. In comparison, about 56,600 applicants subscribed for HK$7.9 billion worth of the bonds last year.

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“Customers have showed a keen interest in the latest tranche of Silver Bonds, evidenced by the new record achieved,” HSBC, which is the joint lead manager with Bank of China (Hong Kong), said in a statement on Friday. The total subscriptions received were about five times that of 2019, it said.

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