What are Silver Bonds?

Silver Bonds represent a financial instrument introduced by the Government of the Hong Kong Special Administrative Region to address the challenges posed by an aging population and to promote inclusive finance. These bonds are primarily designed for Hong Kong residents aged 60 and above, which is the rationale behind their designation as "silver." Moreover, Silver Bonds provide stable returns, as their interest rates are linked to the average annual inflation rate, with a guaranteed minimum interest rate. This structure ensures that the returns for investors at least keep pace with inflation. Consequently, the primary objective is to offer senior citizens a secure, low-risk investment option that delivers consistent returns while simultaneously encouraging the industry to develop the potential of the silver economy.

Purchasing Conditions and Features

• Age Requirement: Applicants must possess a valid Hong Kong Identity Card and must have been born on or before December 31, 1965, meaning they will reach the age of 60 by 2025 or earlier.
• Single Application: Investors are permitted to submit only one application; any duplicate applications will be disregarded.
• Subscription Period: According to the latest information, the subscription period for Silver Bonds will extend from 9:00 AM on September 30, 2024, to 2:00 PM on October 14, 2024, with a scheduled issuance date of October 23, 2024.
• Target Issuance Amount: The target issuance amount for Silver Bonds is HKD 50 billion. The government reserves the right to increase this target to a maximum of HKD 55 billion, depending on the response to subscriptions.
• Principal Repayment: The principal amount will be fully repaid upon the bond's maturity.
• Bond Term: Silver Bonds have a term of three years, with interest payments made semi-annually. The interest rate is linked to local inflation and is guaranteed to be no less than 4%.
• Investment Threshold: Each bond has a face value of HKD 10,000, with a maximum allocation limit of HKD 1 million per investor, allowing for a maximum purchase of 100 bonds.
• No Secondary Market: Silver Bonds do not have a secondary market; however, investors may sell their bonds back to the government prior to maturity, which will redeem the bonds at the original price plus accrued interest.

Positive Impact of Silver Bonds on the Hong Kong Economy

1. Support for Infrastructure Development: Proceeds from the bond issuance will be allocated to the Capital Works Reserve Fund, which will invest in infrastructure projects that benefit both the economy and the public. This allocation enhances citizens' sense of participation and the benefits derived from long-term development initiatives in Hong Kong.
2. Promotion of Inclusive Finance: Silver Bonds provide senior citizens with a secure, low-risk investment option that offers stable returns, thereby facilitating the advancement of inclusive finance.
3. Diversification of Financial Market Products: The issuance of Silver Bonds expands the scale of Hong Kong's bond market, thereby increasing market activity and enhancing the overall attractiveness and vibrancy of the bond market.
4. Addressing the Challenges of an Aging Population: By offering investment products with stable returns, Silver Bonds assist seniors in managing their living expenses during retirement, thereby alleviating the economic pressures associated with an aging population.
5. Enhancing Financial Stability: As a low-risk investment product, Silver Bonds contribute to the overall stability of the financial market, thus providing investors with a broader range of investment options.