Hong Kong expands Silver Bond offering to HK$50 billion, raises coupon to 5 per cent to help counter cost of living

Sale of new batch of inflation-linked bonds may be increased to as much as HK$55 billion depending on market response, HKMA says

Bonds will pay a minimum guaranteed coupon of 5 per cent annually, versus 4 per cent in the previous sale in August 2022

Reading Time:2 minutes

Elderly citizens walking or working near a busy street in Hong Kong in December 2021. Photo: Dickson Lee

Published: 2:31pm, 14 Jul 2023

Hong Kong is increasing the size of inflation-linked bond offering by as much as 57 per cent while also lifting the coupon on the notes, a move to help the city’s senior citizens cope with higher cost of living and currency weakness.

The government will offer HK$50 billion (US$6.4 billion) of Silver Bonds for sale to those 60 years and above to boost their income in an uncertain economic climate, the Hong Kong Monetary Authority (HKMA) said.

The three-year bonds will pay a guaranteed annual coupon of 5 per cent, versus 4 per cent in the previous sale of HK$35 billion of similar securities in August 2022. The bonds pay the minimum 5 per cent, or a floating rate pegged to the city’s consumer price index, whichever is higher.

In comparison, the yield Hong Kong government bonds maturing in August 2026 was recently indicated at about 3.58 per cent, according to Bloomberg data.

HKMA deputy CEO Darryl Chan (left) and Wong Tsz-cheuk, head of Greater China FX Cash and EM rates trading at HSBC, address the local media on Silver Bond sale in Central on July 14. Photo: SCMP

“The issuance size aims to promote greater participation by senior citizens, while the higher rate aims to help [them financially] in this highly uncertain investment environment,” HKMA deputy CEO Darryl Chan said at a media briefing. “Silver bonds are a safe and flexible investment for senior citizens.”