The market expects the interest rate of this tranche of iBond will range from 3% to 4%.
HK government will pay interest twice a year on the scheduled interest payment dates, the annual interest rate to be used will be as the higher of:
- The floating rate, being the arithmetic average of the year-on-year rates of change in the 2009/10-based Composite Consumer Price Index (CPI) for the six most recent preceding months.
- The fixed rate of 1%.
Key features of iBond as follower:
- A 3-year bond whose semi-annual interest payments are linked to average annual inflation, subject to a minimum interest rate of 1.00%.
- HK government will repay 100% of the principal amount at maturity.
Benefits of investing in iBonds include:
- Strong credit: HK government has a strong, “investment grade”, credit rating.
- Regular returns: Similar to other retail bonds, they offer regular payments of interest for the entire term of your investment.
- Interest rate: iBonds may offer higher interest rates than Hong Kong dollar time deposits of similar maturities.
The government is going to launch the fifth round of iBond on mid of July with an issue size unchanged at $10 billion and a term of three years. According to past fourth round of iBond, the interest rate around 3% to 5%, due to the inflation in 2015 may slow down. The first iBond were listed on Hong Kong Stock Exchange to listing on 29 July 2011. The offered issue amount is HK$10 billion and a term of three years.