Hong Kong Financial Secretary Paul Chan Mo-po (center), Secretary for Financial Services and the Treasury Christopher Hui Ching-yu (third right), Deputy Chief Executive of the Hong Kong Monetary Authority Edmond Lau (third left) and other government officials attend a press conference on the launch of inaugural retail green bond under the Government Green Bond Programme, Feb 15, 2022. (PHOTO / HKSAR GOVERNMENT)
HONG KONG – The Hong Kong Special Administrative Region government’s first green retail bond went on sale Thursday, opening at HK$99.95 ($12.74) before breaking through the HK$100 offering price. Analysts said that it was within expectations as the price was influenced by global bond markets.
The bond will have a tenor of three years. The investment threshold for a single lot of retail green bonds is HK$10,000. Bondholders will be paid interest every six months at a rate linked to inflation in Hong Kong, subject to a minimum rate of 2.5 percent.
Bondholders will be paid interest every six months at a rate linked to inflation in Hong Kong, subject to a minimum rate of 2.5%
It received an overwhelming response from retail investors with more than 488,000 valid applications, and all valid applications were eligible for bond allotment, with about 190,000 people receiving five lots of green bonds.
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The bond was listed amidst stock market turmoil, with the Dow Jones Industrial Average in the US closing down more than 1,100 points and the Hong Kong stock market falling more than 500 points.
Wen Jiawei, a senior economist at Dah Sing Bank, said the government’s forecast for this year’s inflation is 2 percent or lower. He said he believes that investors have a promising chance of receiving a guaranteed dividend of 2.5 percent, which is more generous than the minimum 2 percent rate on similar inflation-linked bonds known as iBonds.
He expects the retail green bond to settle a little above the HK$100 level in the near term without much of a rally.
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With a guaranteed interest rate of 2.5 percent, the price of the green bond is not expected to fluctuate significantly, and investors are advised to take a wait-and-see approach and deploy a long-term outlook to earn fixed interest, said Christina Chan, a financial analyst at Futu Holdings Ltd.
suzihan@chinadailyhk.com