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Hong Kong’s latest inflation-linked bonds are oversubscribed, attract US$5 billion from investors dejected by Ant IPO suspension

  • Hong Kong’s newest inflation-linked bonds offer guaranteed returns of 2 per cent annually for three years
  • The government might increase the size of the offering to HK$15 billion to accommodate strong demand

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An iBond promotion at a Bank of China (Hong Kong) branch in Central. Photo: SCMP
Hong Kong’s latest offering of inflation-linked bonds has been subscribed 3.9 times, attracting HK$38.9 billion (US$5 billion) in funds from investors enticed by their 2 per cent guaranteed return rate.
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The strong response, which follows the suspension of Ant Group’s highly-anticipated blockbuster initial public offering this week, makes the current batch the third most popular in history. The bonds attracted HK$49.8 billion in overall principal value in 2012 and HK$39.6 billion in 2013.
The sale might offer some consolation to many investors who missed out on the expected windfall from Ant’s IPO, after Chinese regulators halted the fintech giant’s debut late on Tuesday. Local retail investors had poured in HK$1.3 trillion in bids for the Hong Kong leg of its dual listing.

About 460,000 people have subscribed for the current batch of iBonds, according to preliminary data from distributors, a Hong Kong government spokeswoman said. The subscription amount is 3.9 times the target amount of HK$10 billion and 73 per cent higher than the value recorded in 2016, she said.

“Because the value amount of subscriptions exceeded the target amount, it’s predicted that the final issuance amount will rise to a maximum of HK$15 billion,” the spokeswoman said, adding that the final result will be announced on November 12.

The increase in issuance will represent a 50 per cent hike over the HK$10 billion worth of bonds issued during each of the previous six instalments between 2011 and 2016.

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