The government has set up a retail bond programme to issue retail bonds for Hong Kong citizens. Some citizens invest in retail bonds because of the following benefits:
Retail bonds offer regular payments of interest for the entire term of the investment.
They may offer higher interest rates than Hong Kong dollar time deposits of similar maturities.
The risk is lower because the HKSAR Government enjoys a strong, “investment grade”, credit rating.
Under the retail bond programme, there are the iBond series and the Silver Bond series. Both are 3-year bonds with their semi-annual interest payments linked to average annual inflation. The principal will be repaid in full (i.e. 100%) at maturity. The major differences of these two series are as follows:
The iBond series is subject to a minimum interest rate of 2.00%. For the Silver Bond series, there are fixed interest rates. For example, investors are guaranteed not lower than 3.50% per annum for Silver Bond series due in 2023. (For details of subscription, please click here.)
Only iBonds can be traded in the secondary market. Silver bonds cannot be transferred to any other person save for the transfer to the investor’s successor under the relevant succession law.
For more details, please visit to www.hkgb.gov.hk