Tuesday, June 05, 2012

iBond application submitted

This morning I submitted an application for the HKSAR Government's second issue of iBonds. The iBonds offer a term of three years and a coupon equal to the higher of Hong Kong CPI or 1 percent payable six monthly in arrears. Most banks will waive the usual fees that apply to subscribing, receiving coupon payments and redeeming the bonds.

I do not view the iBonds as a good investment. At best, you will slightly lag CPI (due to the fact that payments are made in arrears). However, I am taking the view that with minimal risk of principal loss, they can form part of my allocation to cash and for that purpose they are clearly better than bank deposits. My intention is to hold on to my allocation until maturity.

So in went my application - which took about two minutes to do on line.

The bad news is that allocations were pretty small for the first issue and with the current market uncertainty are likely to be even lower this time around.

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