By investing in bonds, you may receive steady interest income with a potentially higher yield compared to the interest you'd earn on cash savings rates over the same amount of time.
Find out how to invest in bonds with us.
Bonds offer several key benefits:
Higher interest potential than cash savings accounts
Diversify your investment risk
Potential long-term capital gain
Earn a regular stream of interest income
What is a bond?
A bond is essentially a loan that an investor – you – gives to the issuer of the bond. In return for this loan, the issuer promises to pay interest and return the initial investment when it is due.
Bonds usually feature in every investor's balanced portfolio. This is because they add stability and diversity due to their relatively low volatility compared to other investments.
The income potential from bonds is reflected in the coupon rate. This rate can be fixed or floating, and income payments could be made periodically or at the bond's maturity. A bond reaches maturity at a specified future date. This is when your principal investment will be repaid.
Bonds are mainly for medium- to long-term investment. So you should be prepared to commit to the full investment term, as some or all of your investment could be lost if you sell early.
Things to consider
- 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
Types of bonds
We have a wide range of investment-grade bonds and selective range of high-yield bonds with maturity ranging up to 30 years
- Corporate bonds, supranational bonds, government/quasi-government bonds
- Fixed-rate bonds, floating rate coupon bonds
- Available in multiple currencies: USD, AUD, CAD, CNH, EUR, GBP, NZD, SGD
Things to know
Fees and charges
How to invest
Contact one of our advisers to get started.
Frequently asked questions
What is the relationship between Interest rates and Bond prices?
What types of bond are available through HSBC?
What are the pre-requisite for investing?
How can I trade bonds with HSBC?
Do I have to hold bonds until maturity?
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