Latest round of Hong Kong iBonds could rise to HK$15 billion, available for subscription on October 23

Name: Hong Kong’s class of 2020 fears becoming ‘lost’ generation as Covid-19 shakes the global economy
Uploaded: 2020-10-05T11:15:18.000Z
Duration: 3 min 20 s
Description: Hong Kong’s class of 2020 fears becoming ‘lost’ generation as Covid-19 shakes the global economy

The city plans to issue HK$10 billion worth of three-year bonds, but could increase the total issue to HK$15 billion depending on popularity: HKMA

iBonds will pay a minimum interest rate of 2 per cent every six months

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Despite the popularity of government bond programmes for small investors, brokers said Hong Kong’s retail bond market remained underdeveloped. Photo: Kathleen Magramo

Enoch YiuandChad Bray

Published: 7:15pm, 5 Oct 2020Updated: 11:48pm, 5 Oct 2020

Retail investors will be able to subscribe to the latest iteration of Hong Kong’s inflation-linked government debt, known as iBonds, beginning October 23, according to the Hong Kong Monetary Authority (HKMA).

The iBonds, the seventh series issued since 2011, will make an interest payment every six months based on the average rate of the consumer price index over that six-month period, with a guaranteed minimum payment of 2 per cent. That is double the minimum guaranteed rate for the last series of iBonds issued in 2016.

Hong Kong identity card holders will be able to subscribe in HK$10,000 (US$1,290) increments at placing banks, securities brokers or the Hong Kong Securities Clearing Company beginning at 9am on October 23, according to the city’s de facto central bank. The subscription period will run through 2pm on November 5, with the bonds being issued on November 16 and listed on the Hong Kong stock exchange the next day.

The city plans to issue HK$10 billion worth of three-year bonds, but could increase the total issue to HK$15 billion depending on popularity, according to Edmond Lau, senior executive director of the HKMA. At HK$15 billion, it would be the highest iBond offering to date, he said.

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Hong Kong’s class of 2020 fears becoming ‘lost’ generation as Covid-19 shakes the global economy

“We believe the extremely low interest rate environment will stay on for a long time. We want to offer stable investment returns to investors and to attract them to the bond market,” Lau, who was speaking in Cantonese, said at a press conference on Monday. The latest batch of iBonds were unveiled on Sunday in a blog post by Financial Secretary Paul Chan Mo-po, and come as historically low interest rates globally have pushed savings rates lower.