Bonds

There are 2 types of bonds: corporate and government.

Corporate bonds

These are debt security, issued by a private or public company to raise capital. You're essentially lending money to the company in return for interest payments and return of face value. These are paid at the bond's maturity or when the bond is called by the issuer, where applicable.

Government bonds

These are debt obligations, issued by a government to support government spending and obligations. You're essentially lending money to the government in return for interest payments and return of principal. These are paid at the bond's maturity.

Both types of bonds share these characteristics: par or face value, interest rate or coupon rate, maturity (if applicable), and credit rating of investment grade or high yield.

But corporate bonds are from an issuing corporation, while government bonds are from an issuing country. Corporate bonds also have a payment rank structure that government bonds do not.

We offer a wide range of investment-grade bonds. We also offer a curated range of high-yield bonds with a tenor of up to 30 years.

These bonds include corporate bonds, supranational bonds, government, and quasi-government bonds. You can choose from fixed-rate bonds and floating rate coupon bonds.

Our bonds are available in these major currencies:

• US dollar (USD)
• Australian dollar (AUD)
• Canadian dollar (CAD)
• Swiss franc (CNH)
• Euro (EUR)
• British pound sterling (GBP)
• New Zealand dollar (NZD)
• Singapore dollar (SGD)

• A bond's coupon rate depends on the credit quality of the bond issuer. The top-quality bonds are usually issued by governments, followed by bonds from government-linked companies, banks and corporations.
• Non-investment-grade bonds and unrated bonds are riskier, but offer potentially higher returns due to the higher risk premium.
• New bond issues may have an effect on the value of current bonds, and therefore your earned interest income. Interest rate risk increases proportionately with the length of bond maturity.
• Your bond value may decrease over a longer term due to inflation.
• Exchange rate movements could cause fluctuations in your return if your bond is issued in a foreign currency.
• If a bond issuer defaults due to financial difficulties, you run the risk of losing your investment.

Inward transfers of bonds are free of charge.

Outward transfers of bonds are subject to a charge of USD100 (USD109, inclusive of GST where applicable).

We won't charge you any custody fees.

The fees and charges listed are not exhaustive. For full details, please refer to our fees and charges (PDF).

You can open an equity investment account with us at any HSBC branch. We also offer bond trading services through our branches. Find your nearest branch.

In general, bond prices are inversely related to interest rate movements. If interest rates rise, bond prices could fall. As the buyer, you’ll be compensated for the coupon through the price adjustment, which is lower than comparable market rates. Similarly, if rates fall, you pay a higher price for a coupon that’s higher than comparable market rates.

If you choose to sell your bonds when interest rates are rising, you’ll suffer a capital loss if the bond values are lower than what you paid for the bonds. But if you continue to hold onto the bond, you’ll incur opportunity cost as you could’ve invested your funds in higher-yielding instruments.

If you buy and hold, market price fluctuations may not matter as much for you. This is because you’ll receive interest throughout the life of the bond and your principal at maturity, if the issuer doesn’t default. But if you invest in bond funds, interest rate movements may affect you. That is because they will impact the funds’ net asset value, and the price at the which you can redeem your units.

No, you can sell your bond before it matures. If the selling price is higher than the original buying price, you could profit from capital appreciation.

Under normal market circumstances, we’ll repurchase bonds at the prevailing market price. This is subject to the bond’s liquidity. But we may offer a buying price that’s different to the original selling price. This is due to changes in market conditions.