Dwindling Interest from Seniors in Hong Kong’s Latest $6.4 Billion Silver Bonds Sale Despite Over-subscription

The latest sale of Silver Bonds sees a decline in purchases by elderly individuals in Hong Kong, despite the sale amounting to US$6.4 billion. Investors were eager to acquire 1.4 times the number of bonds the government had available, but the total number of applications and the overall bid amount were lower than the previous year.

Investors placed approximately 300,100 proposals for bonds equivalent to HK$70.16 billion during the offer phase, commencing on September 30 and concluding on Monday at 2pm, according to a government representative.

The quantity of applications declined by 7.7 per cent in comparison to last year's total of 326,000, and the overall proposed sum was 2.8 per cent lower than last year's record high of HK$72.18 billion. Despite this, the sale surpassed the 2022 offering when 290,000 elderly individuals submitted bids totalling HK$62.64 billion for the bonds, which are specifically meant for investors who are 60 years old and above.

Due to the excited feedback, it's anticipated that the government will raise the final amount issued to the maximum of HK$55 billion. The final allocation results will be disclosed by the Hong Kong Monetary Authority (HKMA) on October 21.

The ninth yearly bond issuance is a historical event as it's the first time it's being done under the government's infrastructure bond structure. Analysts have pointed out that this is an attractive feature as it provides the public with an opportunity to invest in infrastructure projects.

The funds raised from the bond sale will be allocated towards financing initiatives such as the Central Kowloon Route project, the Hung Shui Kiu development in Yuen Long, and enhancing the drainage system in Wong Tai Sin.

The most recent series of Silver Bonds carry a three-year term and assure an annual interest rate of 4 per cent. This is lower than the previous year's 5 per cent, but it matches the interest rate of the bonds issued in 2022.