A bond can be purchased by an investor who is, in essence, lending money to the company or organisation that issues the bond. In return, investors will receive fixed coupon payments from the bond issuer.
Bond issuers, generally corporations or governments, are obliged to pay investors interest on a fixed basis. Payment can be made quarterly, bi-annually or annually. At the maturity date, the bond issuer is required to repay the principal to the investor, in accordance with the terms spelled out in the offer document.
Safer Than Shares
It is generally safer to invest in bonds than shares. If a company goes bankrupt, bondholders, as creditors, are paid ahead of equity owners. This means they stand a better chance of recovering part of their investments.
Security and Predictability
Bond issuers are obliged to pay out coupons, giving investors stable returns. Bond issuers guarantee that investors will get their money back at the end of the bond tenor.
Relatively Attractive Returns
As an asset, bonds typically pay higher interest rates than bank deposits. They provide a better investment vehicle for investors who are dissatisfied with low deposit rates but may not be willing to take on more risks in the stock market.
UOB Kay Hian offers a broad selection of over 900 Bonds. You can build a diversified portfolio that has a lower risk profile than an equity portfolio, all while enjoying stable returns.
As one of the biggest brokers in Asia, we enjoy direct access to bonds issued in key markets. This allows us to seek the best prices for you to seize all market opportunities.
We offer margin financing for selected bonds. At UOB Kay Hian, we can finance up to 85% of the value of a bond, which will help you invest more efficiently.
Our dedicated specialists are always on hand to provide the support and information that you need when making key investment decisions or executing orders.
Open a UTRADE account today and start enjoying the premier platform you deserve. Should you have any enquiries, please call Bond Enquiry Hotline at (852) 2826 4819.
Investment in Bonds / CDs involve substantial risks including market risk, liquidity risk, and the risk that the issuer will be unable to satisfy its obligations under the Bonds / CDs. Do not invest in the bonds / CDs unless you fully understand and are willing to assume the risks associated with it. You should consider carefully whether bonds / CDs are suitable for you in light of your experience, objectives, financial position and other relevant circumstances.
The bonds / CDs are subject to both the actual and perceived measures of credit worthiness of the issuer. There is no assurance of protection against a default by the issuer in respect of the repayment obligations. In the worst case scenario (e.g. upon insolvency of issuer), you might not be able to recover the principal and any coupon if the issuer defaults on the bonds / CDs.
You should be prepared to invest your funds in bonds / CDs for the full investment tenor; you could lose part or all of your investment if you choose to sell your bonds / CDs prior to maturity.
It is the issuer to pay interest and repay principal of bonds / CDs. If the issuer defaults, the holder of bonds / CDs may not be able to receive the interest and principal back. The holder of bonds / CDs bears the credit risk of the issuer and has no recourse to UOB Kay Hian (Hong Kong) Limited ("UOBKH").
Bonds / CDs price changes with the perceived credit risk, which is gauged by credit ratings assigned by international rating companies such as Moody's and Standard & Poor's.
Geopolitical conditions can also affect the product price and yield. Terrorist acts and threats and the response of governments in the UK, the U.S.A. and elsewhere to them could affect the level of economic activity.
A rise in interest rate may cause bonds / CDs price to decline, thereby resulting in a capital loss if the bonds / CDs are sold before the maturity date.
If the deposit currency is not your home currency, and you choose to convert it back to your home currency upon maturity, you may make a gain or loss due to exchange rate fluctuations.
An inactive or illiquid secondary market may cause difficulty in selling bonds / CDs.
There may be exchange rate risks if you choose to convert payments made on the bonds / CDs to your home currency.
Other risks associated with bonds / CDs investment include call risk, inflation risk etc.
All financial markets may at times be adversely affected by changes in political, economic and social conditions.
Convertible Bonds are bonds that may be converted into another form of corporate security. Conversion only occurs at specific times at specific prices under specific conditions and this will all be detailed at the time the bond is issued. Convertible Bond is a high risk structure financial product, it is different from the typical bonds.
Because they offer a conversion right, such bonds usually offer a lower interest rate than ordinary bonds. The price of these bonds is essentially determined by the price of the underlying shares. Indeed, if the price of the shares drops, the price of the bonds falls as well. Therefore, the risk of price losses is higher than for bonds without conversion. The price of Convertible bond may become zero when the stock price has dropped below a certain price level.
There is usually a minimum lock-in period during which an investor cannot exercise his right of conversion. In case the right of conversion is not exercised, the bonds remain fixed-interest notes, repayable at par on maturity.
The Investment Product is not equivalent to time deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
If this product is not SFC Authorized Products, only the Professional Investors defined under SFO may invest.
The product credit rating might be downgraded if there are some major events happen to the issuer.
Most Convertible Bonds are traded over-the-counter, not exchange traded products, so the price of convertible bonds are lacking of transparency compared with exchange traded products. In addition, the liquidity risk for OTC trading products is much higher than the exchange traded products.
Indicative bonds / CDs prices are available and bonds / CDs prices do fluctuate when market changes. Factors affecting market price of bonds / CDs 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 / CDs. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling bonds / CDs.
If you wish to sell the bonds / CDs purchased through UOBKH, UOBKH may repurchase them 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.
The above information is provided for reference only. The information may not contain all material terms, in and of itself should not form the basis for any investment decision. Potential investors must seek their own independent advice in relation to any legal, tax, accounting or regulatory issues relating to the matters discussed herein, By accepting receipt of this information the reader will be deemed to represent that they posses, either individually or through their advisor, sufficient investment expertise to understand the risks involved in any purchase or sale of any investment products, referenced herein, and investor has made its own independent judgment. The value, price or income from investments may fall as well as rise. This presentation is confidential and is submitted to selected recipients only.