$15b target as iBonds go on sale October 23

The total issue amount of the latest iBonds series may be expanded by 50 percent to HK$15 billion, subject to market response, with subscriptions starting from October 23. The inflation-linked retail bonds will also make their debut on the local stock market on November 17, the Hong Kong Monetary...

Kevin Xu

Tuesday, October 06, 2020

The total issue amount of the latest iBonds series may be expanded by 50 percent to HK$15 billion, subject to market response, with subscriptions starting from October 23.

The inflation-linked retail bonds will also make their debut on the local stock market on November 17, the Hong Kong Monetary Authority said yesterday.

About HK$10 billion worth of iBonds is set to be issued, but the government could increase the issue size to a maximum HK$15 billion depending on the response, it said.

The upcoming batch of iBonds will pay interest to bondholders once every half-year at a rate linked to inflation in Hong Kong, subject to a floor of 2 percent - up from 1 percent in previous issues.

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

The iBonds are a stable and reliable option for investors amid geopolitical uncertainties, the ongoing pandemic and a low interest rate environment, said HKMA senior executive director Edmond Lau.

The government plans to issue iBonds and Silver Bonds totaling not less than HK$13 billion in the fiscal year, Financial Secretary Paul Chan said in his budget speech.

From 2011 to 2016, a total of six batches of iBonds were issued. It has been almost four years since the government issued the last batch of iBonds in 2016.

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

Meanwhile, Hong Kong's overall consumer prices fell by 0.4 percent in August over the same month a year earlier, after a decrease of 2.3 percent in July, according to the Census and Statistics Department.