Hong Kong Monetary Authority Sets 4% Interest Rate for Silver Bond Series

The Hong Kong Monetary Authority (HKMA) has announced the interest rate for the fifth interest payment of the Silver Bond Series due in 2025, as per their latest release. The decision impacts Issue Number 03GB2509R, part of the Government Bond Programme’s Retail Bond Issuance.

Interest Rate Details

As outlined in the Issue Circular dated 9 August 2022, the interest payment is scheduled for 14 March 2025. The HKMA declared that the relevant interest rate would be determined based on whether the prevailing floating rate or fixed rate was higher on 28 February 2025. According to the HKMA, the fixed rate was set at 4.00%, while the floating rate was calculated at 1.82%.

Consequently, the fixed rate of 4.00% per annum was prioritized, marking it as the applicable interest rate for the upcoming payment.

Context and Implications

The Silver Bond Series is a key component of the Hong Kong Special Administrative Region Government’s strategy to provide stable investment opportunities for senior citizens. The decision to apply the fixed rate reflects a cautious approach in ensuring favorable returns for investors amidst fluctuating market conditions.

Additionally, the floating rate was derived from the year-on-year changes in the Composite Consumer Price Index (CPI) for the months leading up to January 2025. The index showed varied rates: August 2024 at 2.50%, September 2024 at 2.20%, and October to December 2024 at 1.40%, with January 2025 reaching 2.00%. The arithmetic average of these figures resulted in the aforementioned floating rate of 1.82%.

For more details, refer to the official announcement by the Hong Kong Monetary Authority.

Image source: Shutterstock