'Silver bond subscriptions could hit new record'

Bank of China (Hong Kong) anticipates record-breaking subscriptions for the recently launched silver bonds, with over 300,000 applications expected. The government's eleventh batch of silver bonds for senior citizens went on sale on September 4, from 9am to 2pm, totaling HK$55 billion. These three-year bonds offer a guaranteed annual coupon of 4.25 percent, slightly below the 2023 record-high of 5 percent but higher than the 3.85 percent in the September batch of the previous year.

Arnold Chow, general manager of the lender's personal banking product department, believes the bonds will be popular due to their stability and attractive interest rate floor. He also noted that the 4.25 percent rate is significantly higher than the 2 to 3 percent offered by local lenders' fixed-deposit products. Given the unstable global economy, with factors such as company profits, inflation, and unemployment at risk, Chow believes there is demand for these stable products.

Each eligible investor, born in 1967 or earlier with a valid Hong Kong identity card, can subscribe for up to 100 board lots, each costing HK$10,000. The bonds are scheduled to be issued on September 15, just before the US Federal Reserve's interest rate decision. The markets have anticipated a rate hike later this year, but Chow reassures customers that the current yield curve has already accounted for potential changes.

The previous batch of bonds last year saw 370,000 applicants requesting HK$98.2 billion, a record high for both subscription volume and total value.