Officials announced details of the Silver Bond at a press conference on July 15, 2016. Launched in 2016, Silver Bonds are among a wide spectrum of financial products with steady returns to help the city's senior residents prepare for their retirement. (PHOTO / HKSAR GOVERNMENT)

The Hong Kong government has raised both the guaranteed returns and the size for its latest batch of Silver Bonds, offering a more attractive investment channel to meet some 2 million senior residents’ financial needs. 

For the eighth batch of the three-year inflation-linked bonds aimed at citizens aged 60 or above, the government has lifted the guaranteed minimum interest rate to 5 percent from 4 percent offered with the previous issuance last August. 

The offering size has been scaled up to HK$50 billion ($4.5 billion) from the HK$35 billion issued in the last tranche. The government may exercise discretion to increase it to a maximum of HK$55 billion depending on the market response. 

Given its low risk and attractive guaranteed interest rate, the demand for the Silver Bond offering has continued to grow in tandem with the increasingly aging society, with close to 290,000 members of the public subscribing last year

“The main consideration (for the raises) is to provide a stable, safe, low-risk, and attractive investment option for senior citizens in the current volatile investment environment,” Financial Secretary Paul Chan Mo-po explained on Friday. 

The latest issuance came amid a rising elderly population in the city. According to preliminary figures from the Census and Statistics Department, there were nearly 2.2 million residents aged 60 or above last year, representing a year-on-year increase of 100,000 people. 

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Launched in 2016, Silver Bonds are among a wide spectrum of financial products with steady returns to help the city’s senior residents prepare for their retirement. Other programs include the HKMC Annuity Plan, the Reverse Mortgage Programme and the Policy Reverse Mortgage Programme, which are also aimed at assisting the public in arranging for their financial needs after retirement. 

Given its low risk and attractive guaranteed interest rate, the demand for the Silver Bond offering has continued to grow in tandem with the increasingly aging society, with close to 290,000 members of the public subscribing last year. 

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The interest for the new batch will be paid once every six months with a minimum subscription of HK$10,000 for one unit. To prevent an over-concentration of holdings in retail bonds by a small number of investors, a maximum allocation of HK$1 million for 100 units per investor will be imposed. 

The subscription period will run from July 28 through August 9 and the issuance date is August 18. Eligible Hong Kong residents can apply for the program via 20 placing banks and 28 designated securities brokers.

There will be no secondary market for Silver Bonds, but bondholders may sell them before maturity to the government at parity together with accrued but unpaid interest.

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“The latest issuance of Silver Bond will enable senior citizens secure stable returns in the medium term at a time when the market is expecting we are close to the end of a monetary policy cycle,” said Wong Tsz-cheuk, managing director and head of Greater China FX Cash and EM Rates at HSBC. 

“With a low investment threshold and increased issuance size, Silver Bond will continue to be a simple but effective instrument which helps senior citizens protect the value of their savings,” Wong said.

Contact the writer at evanliu@chinadailyhk.com