The government-run Hong Kong Mortgage Corp (HKMC) has launched its first retail bond denominated in Australian dollars to meet investors' demand for high-yield currencies.
The mortgage agency, wholly owned by the government through the Exchange Fund, will issue a one-year fixed-rate bond that can pay up to 7.15 per cent annual interest - more than 1.5 per cent higher than one-year Australian dollar deposits, which pay about 6 per cent.
The bonds are sold through 17 retail banks at par, subject to a A$10,000 (HK$74,887) minimum and a handling fee of 0.15 per cent.
'The bond issue caters to investors who prefer stable interest income and also for more experienced investors who look for yield enhancement and portfolio diversification,' HKMC chief executive James Lau said.
Demand for retail bonds accelerated after local short-term interest rates dropped to near zero this year and investors sought the higher rates of foreign currencies.
With local inflation expected to continue rising because of surging global food prices and a weak local currency, investors need a return of at least 5 per cent to keep pace with inflation.
