The new batch of Silver Bonds officially opened for subscription on Friday and will close on September 4, drawing strong demand as the 4.25 percent floor rate beats banks’ fixed deposit rates.
Some interested subscribers said they hope to subscribe for 20 to 30 lots, noting that the 4.25 percent guaranteed minimum interest rate is higher than most banks’ fixed deposit rates, which usually stand at around 3 percent. The semi-annual interest payment also makes it more stable than high-yield dividend stocks.
Arnold Chow Kwok-cheong, general manager of the personal banking product department of Bank of China (Hong Kong) (3988), said the Silver Bond’s guaranteed minimum interest rate of 4.25 percent is relatively attractive compared to current bank fixed deposit rates of about 2-3 percent. Given its stability and predictability, along with the option to redeem at any time and receive 100 percent of the principal, he believes the subscription will be well received.
Chou noted that this is the 11th issuance of Silver Bonds, and the public is already familiar with the product. He said recent global uncertainties have impacted the economy, corporate earnings, inflation, and unemployment rates. Since the Silver Bond's rate is locked at 4.25 percent, investors do not need to worry about future interest rate movements.
He expects strong demand for the product and anticipates that more than 300,000 eligible individuals will subscribe, potentially breaking the previous subscription record. He suggested that interested elderly individuals consider applying for 20 to 30 lots.
The new batch of Silver Bonds has a target issuance size of HK$50 billion and could increase to HK$55 billion. The bonds have a 3-year tenor, with a principal amount of HK$10,000 per lot and interest paid semi-annually. The coupon rate is linked to Hong Kong inflation, with a guaranteed minimum interest rate of 4.25.
