iBonds reach new heights amid growth green shoots

Finance | Kevin Xu 22 Jun 2021

The latest round of inflation-linked retail bonds - or iBonds - has attracted HK$53.94 billion from nearly 710,000 investors, both record highs.

The overwhelming response came at a time when Hong Kong's economy is seeing green shoots of recovery, with rising consumer prices and falling unemployment figures, while interest rates remain low amid the explosion in money creation by central banks.

There were 709,198 people who subscribed to the eighth series of iBonds. Around 85 percent, or 605,727, will get three board lots - the maximum amount that the government will allot to a local subscriber.

Financial Secretary Paul Chan Mo-po said: "The latest issuance has been warmly received by the public, with the volume of applications and the total application amount both achieving record highs since the iBond's inaugural issuance in 2011."

The iBonds will be issued tomorrow and debut on the stock market on Thursday.

The final issue amount is HK$20 billion, making it the largest issuance since 2011.

The seventh batch in November last year ended a four-year gap of issuance.

"The issuance of iBonds has not only provided the public with a safe investment choice of steady return under the current low interest rate and uncertain investment environment, but also further enhances the investing public's interest in and awareness of bond investments, thereby promoting the development of the retail bond market in Hong Kong," Chan said.

The eighth series will pay interest once every half-year at a rate linked to inflation, subject to a floor of 2 percent - double the 1 percent guaranteed minimum payment which the government offered five years ago.

The bonds carry a tenor of three years and the minimum principal amount investors can apply for is HK$10,000.

The floating interest rate once hit 6.08 percent per annum in the first batch and has never fallen below 1 percent in the following years.

Hong Kong's overall consumer prices rose 0.7 percent in April over the same month a year earlier, after an increase of 0.5 percent in March, according to the Census and Statistics Department.

The seasonally adjusted jobless rate between February and April fell by 0.4 percentage points to 6 percent for the period between March and May, the lowest level since the rate stood at 5.9 percent in the period between March and May last year.


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