interest rate determination
The Hong Kong Monetary Authority (HKMA), which represents the Hong Kong Special Administrative Region government, announced the annual interest rate for the sixth installment of the iBond series, which matures in 2024. According to HKMA, the sixth interest payment will be made. It will be issued on June 24, 2024, subject to the terms and conditions outlined in the issuance circular dated May 12, 2021.
The sixth payment interest rate is determined by the higher interest rate between the current variable interest rate and the fixed interest rate. On June 7, 2024, these rates were announced as follows:
| Variable interest rate: | 1.98% |
| Fixed rate: | 2.00% |
Based on this data, the interest rate for the 6th interest payment was determined to be 2.00% per year.
Background and Significance
The iBond Series, identified by issue number 03GB2406R and stock code 4246, is part of the retail bond issuance program under the Government Bond Program. This bond series is of great significance to individual investors in Hong Kong, providing a safe investment vehicle with stable returns.
The original 6th interest payment date was June 23, 2024, but since this date is not a business day in Hong Kong, the payment schedule has been changed to the next business day, June 24, 2024. Interest will continue to accrue until the new payment date, ensuring investors receive the full benefits of their investment. .
Variable interest rate calculation
The floating rate for the 6th interest payment was calculated based on the year-on-year percentage change in the 2019/20 composite consumer price index (CPI) for specific months through April 2024.
| month | CPI change rate compared to previous year (%) |
|---|---|
| November 2023 | 2.60 |
| December 2023 | 2.40 |
| January 2024 | 1.70 |
| February 2024 | 2.10 |
| March 2024 | 2.00 |
| April 2024 | 1.10 |
| arithmetic mean | 1.98 |
This arithmetic average of 1.98% was compared to a fixed rate of 2.00% to select the higher interest rate for interest payments.
Implications for Investors
The determination of an interest rate of 2.00% per annum reaffirms the stability and attractiveness of the iBond series to investors. This decision reflects the government’s commitment to providing safe investment opportunities, ensuring bondholders receive competitive returns.
The HKMA’s announcement is part of its wider efforts to maintain transparency and predictability in financial markets, which are critical to investor confidence and market stability.
Please refer to official sources for more details.
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