Hong Kong's 8th batch of silver bond minimum yield rate raised to 5%. Chen Weimin: It is expected that bond funds will achieve positive returns and surplus on an annual basis.

According to the information obtained from the Zhītōng Finance APP, on July 14th, the Hong Kong Monetary Authority (HKMA) announced the details of the 8th batch of Silver Bond issuance, with the minimum guaranteed interest rate increased from 4% to 5%. Chen Weimin, Deputy Chief Executive of the HKMA, stated that the determination of the minimum guaranteed interest rate for this Silver Bond issuance has taken into account a series of factors, including past issuance experience, current market conditions, future development trends, and the sustainability of bond funds. He pointed out that bond funds are invested in foreign exchange funds, and it is expected that they will generate positive returns and surplus every year, so the 5% interest rate will not exert pressure on bond funds.

According to the details, the target issuance amount of the Silver Bond is HKD 50 billion, which has been raised to a maximum of HKD 55 billion; the subscription price is HKD 10,000 per lot, with a term of 3 years, and interest linked to local inflation in Hong Kong will be paid every 6 months. The minimum guaranteed interest rate has been increased from 4% to 5%. The subscription for the Silver Bond will start at 9:00 am on July 28th and end at 2:00 pm on August 9th. The issuance will take place on August 18th. Eligible Hong Kong residents can subscribe for the bond through 20 designated banks and 28 designated securities brokers.

There is no secondary market for the Silver Bond. Investors can sell the bond to the Hong Kong government before maturity, and the government will redeem the bond at the original price plus the corresponding cumulative interest. In order to prevent a small number of investors from holding a large amount of bonds, the maximum allocation amount for this issuance has been set at HKD 1 million per investor, which means that each investor can only be allocated up to 100 lots of bonds.

When asked whether the increase in the minimum guaranteed interest rate to 5% anticipates future inflation or warming in Hong Kong, Chen Weimin pointed out that the Hong Kong government predicts an annual inflation level of 2.5% from this year to 2027, but believes that the two are not necessarily related. He believes that the eligibility threshold for the Silver Bond, which is set at 60 years old, is a reasonable arrangement and does not currently see a need for any changes.

Paul Chan, the Financial Secretary of Hong Kong, stated that the minimum guaranteed interest rate for this issuance of Silver Bond is set at 5%, higher than the previous interest rate of Silver Bond. This is mainly due to the consideration of providing stable, secure, low-risk, and attractive investment options for elderly citizens in the current volatile investment environment.

He pointed out that the Silver Bond is low-risk and offers an attractive guaranteed interest rate, and the demand for it continues to increase in an increasingly aging society. Even though the external investment environment is still volatile, after carefully balancing the stability and sustainability of bond funds, the issuance amount and interest rate of this Silver Bond have been moderately increased.