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Bonds

Capitalise on Bonds to enjoy potentially higher returns

HSBC Bonds

As an investor, you may have come across bonds, which essentially is a loan an investor makes to the issuer of the bond. In return for the ‘loan’, the issuer promises to pay interest (commonly know as ‘coupon’) and to return the principal when it is due. Bonds are important if you are aiming for a balanced portfolio. Due to its relatively lower volatility compared to equities, bonds can add stability and diversity to your portfolio. It may also provide regular stream of interest income and potentially grow your capital in the long term. If you feel comfortable lending money to the issuing corporation or government, bonds may be a suitable investment vehicle for you.
Available bonds denomination: MYR, USD, GBP, AUD, RMB, EUR, NZD.

Benefits

  • Gain higher returns via bonds compared to cash investments
    Investing in bonds may improve your return than sitting on cash.
  • You may enjoy a regular stream of interest income – usually payable half yearly
    By investing in bonds, you may receive stable interest income with a yield that is usually higher than the interest received from normal deposit rates for a comparable tenure.
  • Diversify your investment risk
    The inclusion of bonds may bring stability to a portfolio as bonds have low correlation to other asset classes.
  • Reap potential long-term capital gain
    Bonds offer predictable repayment of principal at maturity. Bond prices often move in the opposite direction of market interest rates. Should market interest rates fall, there may be potential for capital gain from price appreciation.

Minimum investment amount: the minimum investment amount will differ according to the various Bonds denomination.

A wide range of investment grade bonds selected by our team of investment experts and distributed by HSBC

These bonds are issued by the governments, supranationals or well-known corporations and are available in different currencies and tenors to suit your investment needs.

Things to know

Warning

The bonds are the subject to the actual perceived measures of credit worthiness of the issuer and the guarantor (if applicable). There is no assurance of protection against a default by the issuer/guarantor (if applicable) in respect of repayment obligations. In the worst case scenario, you might not be able to recover the principal and any coupon if the issuer and the guarantor (if applicable) default on the bond. Customers are reminded that bonds are not protected by Perbadanan Insurans Deposit Malaysia (PIDM).

Risk disclosure

Bond is not equivalent to a time deposit. Bonds are mainly for medium to long term investment, not for short term speculation. You should be prepared to invest your funds in bonds for the full investment tenor; you could lose part or all of your investment if you choose to sell bonds prior to maturity.

It is the issuer to pay interest and repay principal of bonds. If the issuer defaults, the holder of bonds may not be able to receive back the interest and principal. The holder of bonds bears the credit risk of the issuer and has no recourse to the bank unless the bank is the issuer itself.

Indicative price of bonds are available and bond price do fluctuate when market changes. Factors affecting market price of bonds include, and are not limited to, fluctuations in interest rates, credit spreads, and liquidity premiums. The fluctuation in yield generally has a greater effect on prices of longer tenor bonds. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling bonds.

If you wish to sell bonds purchased through the bank, the bank may repurchase it on best effort basis based on the prevailing market price under normal market circumstances, but the buying price may differ from the original selling price due to changes in market conditions.

There may be exchange rate risks if you choose to convert payments made on bonds to your home currency.

The secondary market for bonds may not provide significant liquidity or may trade at prices based on the prevailing market conditions and may not be in line with the expectations of holders of bonds.

If bonds are early redeemed, you may not be able to enjoy the same rates of return when you re-invest the funds in other investments.

Bonds are not protected by PIDM.

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