Hong Kong Monetary Authority Announces 2.00% Interest Rate for iBond Series
Interest Rate Determination
The Hong Kong Monetary Authority (HKMA), representing the Hong Kong Special Administrative Region Government, has announced the per annum interest rate for the sixth interest payment of the iBond Series due in 2024. According to the HKMA, the sixth interest payment will be made on June 24, 2024, under the terms outlined in the Issue Circular dated May 12, 2021.
The interest rate for the sixth payment is determined as the higher of the prevailing Floating Rate and Fixed Rate. On June 7, 2024, these rates were announced as follows:
| Floating Rate: | 1.98% |
| Fixed Rate: | 2.00% |
Based on this data, the interest rate for the sixth interest payment is set at 2.00% per annum.
Background and Significance
The iBond Series, identified by Issue Number 03GB2406R and Stock Code 4246, is part of the Retail Bond Issuance Programme under the Government Bond Programme. This bond series has been significant for retail investors in Hong Kong, offering a secure investment avenue with stable returns.
The original date for the sixth interest payment was June 23, 2024; however, as this date is not a business day in Hong Kong, the payment has been rescheduled to the next business day, June 24, 2024. Interest will continue to accrue until the new payment date, ensuring investors receive the full benefit of their investment.
Floating Rate Calculation
The Floating Rate for the sixth interest payment was calculated based on the year-on-year rates of change in the 2019/20-based Composite Consumer Price Index (CPI) for the specific months leading up to April 2024:
| Month | Year-on-year rates of change in CPI (%) |
|---|---|
| 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 Average | 1.98 |
This arithmetic average of 1.98% was compared to the Fixed Rate of 2.00%, with the higher rate being selected for the interest payment.
Implications for Investors
The determination of the interest rate at 2.00% per annum reaffirms the stability and attractiveness of the iBond Series for investors. This decision ensures that bondholders receive a competitive return, reflecting the government's commitment to providing secure investment opportunities.
The HKMA's announcement is part of a broader effort to maintain transparency and predictability in the financial markets, crucial for investor confidence and market stability.
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