The Hong Kong government is lowering the guaranteed coupon rate for its 10th batch of Silver Bonds offered to the city’s senior citizens, as anticipation builds that the US Federal Reserve will commence its next cycle of interest rate cuts on September 18.
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Up to HK$50 billion (US$6.4 billion) of Silver Bonds will go on sale next month with a guaranteed annual coupon of 3.85 per cent, down from 4 per cent in the batch sold in September last year. Three-year bonds will go on sale from 9am on September 15 until 2pm on September 29, due for issuance on October 10.
The government will pay either the minimum fixed rate or a floating return linked to Hong Kong’s inflation, whichever is higher. Depending on market demand, the bond sale could be expanded to HK$55 billion, making it one of the largest tranches since the programme began in 2016.
Silver Bonds, sold to people aged 60 and above, were designed to support Hong Kong’s ageing population by offering them a stable source of inflation-adjusted income to cope with rising living costs and uncertain financial market returns. They are more appealing than 12-month bank deposits because they pay higher interest, said Christopher Hui, the Secretary for Financial Services and the Treasury Bureau, during a press conference on Friday.
“Elderly investors usually want a stable asset allocation, seek relatively steady returns and pay closer attention to product safety,” added Darryl Chan, the deputy chief executive of the Hong Kong Monetary Authority (HKMA).
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“Silver Bonds present a dependable and stable investment opportunity, designed to deliver peace of mind and consistent returns for seniors,” said Cheuk Wong, the head of markets and securities services in Hong Kong for HSBC, one of the two arrangers of the sale. “With the US interest rate cut trajectory now established, these bonds have become an appealing option for those seeking long-term stability.”