What is a bond?

Bonds are debt securities issued by governments, corporations, or other issuers to bondholders to raise money. Bond issuers will repay the redemption value of the bond upon maturity, and interest of a specific rate throughout the life of the bond. You can also opt to sell the bond at market price before maturity.

Characteristic

• Wide variety
  Various types of bonds with different bond issuer, tenors, coupon rate and currencies are available for your selection.
• Stable Return
  Generally speaking, high quality fixed rate bonds can provide stable return for investors.
• Capital appreciation
  You can also benefit from capital appreciation if bond prices move up.
• Investment Portfolio Diversification
  Bond belongs to a relatively low risk level investment component, which helps investors to develop a diversified portfolio.
• Flexible Investment Amount
  The investment amount can be as small as HK$50,000 for certain types of bonds.
• Various types of Bonds
  (1) By Coupon Rates

  Fixed Rate Bond		-		A bond that pays a fixed rate of interest, which will remain unchanged over the life of the bond.
  Floating Rate Bond		-		A bond with coupon payments reset periodically, linking to the level of a market reference yield such as HIBOR or LIBOR.
  Zero-coupon Bond		-		A bond that pays no coupon interest. It is sold at a discount from par value. Investor may earn income as the bond price moves towards par over time.
  Callable Bond		-		Callable bond is a simple bond with a callable feature that allows the issuer to redeem the bond before the maturity date. It offers higher yield than simple bond without the callable feature.

  
  
  (2) By Bond Issuers

  Corporate Bonds		-		An example of a corporate issuer is Hutchison Whampoa.
  Government Bonds		-		such as US Treasury Bonds.
  Supranational Bonds		-		An entity that does not have one specific national identity. Its membership is normally made up of a number of central banks or government financial authorities. e.g. The World Bank and the Asian Development Bank.

This is an investment product. The investment decision is yours but you should not invest in Bonds unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.

Risk Disclosure Statement
This page is for information and reference purpose only. Shanghai Commercial Bank (“the Bank”) makes no warranty as to the accuracy or completeness of information provided herein. It neither constitutes a solicitation nor an offer with respect to the purchase or sale of any security. Bond investments are not bank deposits and involve risks, including the possible loss of the principal amount invested. Investors investing in bonds denominated in non-local currency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Unless specified, these investments are not obligations of or guaranteed by the Bank. US persons are not eligible. Bond prices may go down as well as up. The Bank accept no liability for any direct or consequential loss arising from this page. The Bank does not guarantee the existence of a secondary market for bonds.