Government bonds would be issued as a way to further develop the bond market, John Tsang Chun-wah said. The finance chief said this would provide more diversified investment products and reinforce Hong Kong's position as an international financial centre. 'In view of the current investment market conditions and low interest rates, we believe that there is demand for quality bonds,' he said. Under the plan, the money raised would be credited to a separate fund to be established under the Public Finance Ordinance. He said the fund would not be treated as part of the fiscal reserves and would be managed separately. Mr Tsang stressed the government bond programme served to provide more choices for investors rather than to raise money. The government will submit the resolution for issuing bonds to the legislature as soon as possible, under the programme for establishing the fund. Investor appetite for government bonds may have been stimulated by the dismal returns from the stock and property markets but if the government decides to issue bonds according to its budget plans, there will be questions about how the funds will be used. Sidney Sze Tak-chee, Society of Registered Financial Planners president, said: 'The Hong Kong bond market is weak now.' A government spokesman said the aim of developing a government bond system was to stimulate the city's debt market and financial development, not to fund its expenses amid budget deficits. 'In the past, we issued one-off government bonds only,' the spokesman said. 'There isn't any system for the regular issuance of government bonds. Thus people can't make purchases if they want to ... which is not that ideal.' But, he said, an advantage of such a fund would be that 'if the programme keeps growing and can qualify for some global government bond index - such as Citibank's World Government Bond Index, which rates bonds with US$20 billion outstanding amount of debt issued - more investors will be attracted'. Pointing out that Hong Kong had high sovereign ratings, the spokesman said there was a demand for quality government bonds in the market. 'We are still considering the investment options for sums credited to the fund,' a government source said. 'One of the options being explored is similar to the investment arrangement for fiscal reserves - placing the sum in the Exchange Fund to be managed by the Hong Kong Monetary Authority.' The government would consult the market on the details of the bond programme, such as the denomination and tenure of bonds.