On October 14, Hong Kong's Secretary for Financial Services and the Treasury, Christopher Hui, said in a reply to lawmakers that when formulating the specific arrangements for each year's bond issuance plan, the government takes into account a basket of factors in a comprehensive manner, including the interest rates and tenors of different currencies and bond types, the government's issuance costs, market response, the government's fiscal position, and the duration and progress of projects. These factors also apply to formulating the issuance arrangements for Silver Bonds, and the elderly population and past subscription data are among the reference data considered for Silver Bond issuance arrangements, but they are not decisive factors for the issuance size of Silver Bonds.
Christopher Hui explained that the government established the "Government Sustainable Bond Programme" and the "Infrastructure Bond Programme" in 2018 and 2024 respectively, with the aim of using market forces to meet the funding needs of sustainable projects and public works projects conducive to Hong Kong's long-term development, so as to promote Hong Kong's infrastructure and urban construction and enable projects benefiting the economy and people's livelihood to be completed as soon as possible. As the government accelerates the construction of the Northern Metropolis and other public works projects related to the economy and people's livelihood, the government obtained the Legislative Council's approval in May this year to raise the combined borrowing ceiling of the "Government Sustainable Bond Programme" and the "Infrastructure Bond Programme" to HK$900 billion, and plans to issue about HK$160 billion to HK$220 billion of bonds each year under the two bond programmes during the period from 2026-27 to 2030-31. Silver Bonds are issued under the "Infrastructure Bond Programme".
Note: Silver Bonds were first launched in 2016 and were issued under the "Government Bond Programme" from 2016 to 2023; since 2024, they have been issued under the "Infrastructure Bond Programme". The "Government Bond Programme" was a measure introduced by the government to develop the local bond market, and the government announced in February 2024 that the "Infrastructure Bond Programme" and the "Government Sustainable Bond Programme" would gradually replace the "Government Bond Programme". The government's current main purpose in issuing Silver Bonds is to raise funds for the development of public works projects, while also providing elderly citizens with a stable investment option offering steady returns. The target issuance size of Silver Bonds in 2026 was originally HK$50 billion, and in view of the enthusiastic subscription response, the final issuance size this time has been increased to HK$55 billion. When formulating the specific arrangements for each year's bond issuance plan, the government takes a basket of factors into comprehensive consideration.
Christopher Hui mentioned that Silver Bonds are intended to provide elderly citizens with a stable investment option offering steady returns, and are not intended to provide retirement income protection for the elderly. Since the financial situations and investment plans of the elderly vary greatly, it is impossible to make an assessment in this regard. Regarding the "allocation cap" for Silver Bonds, in order to allow more citizens to participate in the programme, the issuance circular for the 2026 Silver Bonds stipulates the bond allocation mechanism, with a maximum allocation amount of HK$1 million per investor, meaning each investor can be allocated a maximum of 100 units of bonds. The maximum number of units allocated for each batch of Silver Bonds is a result obtained under the current circular allocation mechanism based on the number of valid applicants and the total subscription amount.
Taking the Silver Bonds issued in 2026 as an example, all valid applications could be allocated bonds, with a maximum of 13 units. The 88,422 applications subscribing for 12 units or fewer were allocated the full number of bonds applied for. The remaining 388,281 applications subscribing for more than 12 units were first allocated 12 units of bonds, and after a ballot, 97,396 of those applications could be allocated one additional unit of bonds. The current allocation mechanism can both cover all valid applications and meet the needs of small investors. The government will continue to monitor the market response to Silver Bonds and formulate suitable arrangements for future bond issuance plans.
Christopher Hui mentioned that since the issuance of Silver Bonds began in 2016, an early redemption arrangement has always been in place. At present, bondholders may submit early redemption requests to the government through placing banks or designated securities brokers on any business day. The bonds will be redeemed on the third business day after the placing bank or designated securities broker receives the relevant request, and the redemption amount is equal to the principal amount plus the relevant accrued but unpaid interest (calculated up to but excluding the redemption settlement date), with interest calculated at the fixed annual rate for the corresponding batch.
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