An elderly man wearing a face mask does exercise in Ma On Shan in Hong Kong, March 7, 2022. The Hong Kong Special Administrative Region's government has issued a seventh batch of Silver Bond worth between HK $35 billion $4.46 billion and HK $45 billion. The bonds will offer investors a guaranteed return rate of 4 percent with a three-year tenor.
The issuance size of the seventh 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 have a valid Hong Kong identity card will be eligible for subscription, according to the government statement on Tuesday.
The Silver Bond issue 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, 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 in an uncertain investment environment. Financial Secretary Paul Chan Mo-poChan Mo-po said in the statement that both the target issuance size and the maximum issuance size are higher than those of our previous issuances, which would promote greater participation by senior citizens.
Bond investors can sell their bonds before maturity to the government before they are paid off with accrued but unpaid interest, so there will be no secondary market for Silver Bond. Each investor will be allocated 100 units of retail bonds at a maximum allocation of HK $1 million.
The subscription period will start on Aug 23 and end on Sept 2. In the news conference, Hong Kong Monetary Authority Executive Director Monetary Management Clara Chan said that eligible residents should hold the bond investment until maturity.
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The bond issuance arrangement referenced previous bond issuance experience, current financial market situation and the recovery pace of the financial market. Chan said that the issuance will enhance market confidence and promote the development of the local bond market.
In the finance chief's announcement in February, the finance chief announced that the SAR administration will issue Silver Bond this year, with the intention of offering seniors an investment option with steady returns. According to Census and Statistics Department data, there will be 2.1 million senior citizens who are eligible to subscribe to the Silver Bond.