Hong Kong Silver Bond Pays 5% as Fixed Rate Beats Inflation Floor

Hong Kong’s Silver Bond holders will receive a 5% annual interest rate for the fifth payment cycle, the Hong Kong Monetary Authority confirmed on February 3, as the fixed rate floor substantially exceeded the inflation-linked alternative.

The announcement covers Issue Number 03GB2608R, with payment scheduled for February 20, 2026. Bondholders benefit from the instrument’s dual-rate structure, which guarantees the higher of either a 5% fixed rate or a floating rate tied to local inflation.

This time around, it wasn’t close. The floating rate came in at just 1.17%, calculated from Hong Kong’s Composite Consumer Price Index changes over the preceding six months. That spread of nearly 4 percentage points between the guaranteed floor and inflation tells a clear story about the city’s price environment.

Inflation Running Cool

The CPI data underlying the floating rate calculation shows Hong Kong’s inflation remained subdued throughout the second half of 2025. Monthly readings ranged from 1.0% in July to 1.4% in December, averaging out to the 1.17% figure.

For retail investors who purchased these bonds when they launched in July 2023, the consistent 5% payouts represent solid returns in a low-inflation environment. The fixed rate has effectively acted as the operative rate throughout most of the bond’s life, given Hong Kong’s muted price pressures.

What This Means for Holders

Silver Bonds target Hong Kong residents aged 60 and above, offering government-backed income with inflation protection as a backstop. The structure works both ways—when inflation runs hot, holders get compensated; when it doesn’t, they still collect a respectable fixed return.

With this fifth payment, the 2026 series enters its final year before maturity. Holders have one more interest payment ahead before principal redemption. Given current inflation trends, the 5% fixed rate appears likely to remain the binding constraint unless Hong Kong experiences an unexpected price surge in the coming months.

The HKMA continues administering these instruments under the Government Bond Programme’s Retail Bond Issuance framework, maintaining the city’s commitment to providing accessible fixed-income options for senior residents.

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