Staff reporter
The Hong Kong government may issue retail bonds for sale as early as late September, after announcing a plan in February to issue HK$70 billion such bonds for this financial year, local media reported.
The Hong Kong Monetary Authority, which will assist with the issuance, was reported to have sent questionnaires to retail banks to learn about their preparations for the retail bonds to be launched by the government, according to sources.
HKMA also asked the lenders whether their systems could operate as normal under adverse weather, under new rules which will come into effect on September 23.
Referring to HKMA’s previous practices, the survey among the banks seems to indicate that the issuance of government bonds to retail investors will come soon.
The launch is projected to take place at the end of September at the earliest, but the date is subject to the official announcement, according to the report.
In February, Financial Secretary Paul Chan Mo-po revealed in his latest budget that the government will issue HK$50 billion of silver bonds for those aged 60 and above and HK$20 billion of green and infrastructure bonds for the current financial year ending in March 2025.
According to the report, HKMA did not mention the date or the order of the issuance in the survey. The city’s de facto central bank only asked the banks whether their systems could handle the transactions if both silver and green bonds were launched at the same time.
Assuming readiness from all parties, the government expects to make the issuance in the short term, the report added, citing sources.
An HKMA spokesperson said it is preparing the issuance of government retail bonds and that the government will unveil details at an appropriate time.
Last year, the government opened the subscription of the eighth batch of silver bonds in July and the second batch of green bonds for local retail investors in September, with both oversubscribed.
The interest rate per annum started from 5 percent for the silver bonds and 4.75 percent for the green notes.
But the minimum rate of the coming government retail bonds is expected to be lower than that of the previous batches, as the interest rate hike has been paused and the US Federal Reserve is projected to start a cut next month.
The three-month deposit rates offered by major banks have been lowered from over 5 percent at the end of last year to a current range of 3.3 to 3.6 percent and are expected to drop further next year.