Bonds are debt securities issued by governments, corporations or other entities. When you purchase a bond, you are agreeing to lending money to the bond issuer. The bond issuer is obligated to pay you a specified interest rate (coupon) during the life of the bond and return the principal to you upon maturity. You may hold the bond until a pre-specified maturity date or sell it during the life of the bond.

Reasons of investing in bonds:

  • Bonds have the potential to pay a greater return than cash savings, although they are more risky, and are considered less risky than equities. The return on bonds can be twofold. First is the income received through the coupons. Second is the payment you receive if you sell the bond. Of course, if you hold the bond until it matures, you will get your entire principal back, unless the entity which issues the bond defaults.

  • You might be able to get more than your principal back. Bonds can be resold in the secondary market before they mature. Sometimes bond traders will bid up the price of the bond beyond its nominal value.

Bonds and Credit Risks:

  • One of the main risks associated with bond investing is credit risk, which is the probability that the issuer will not pay the coupons or the principal i.e. the original loan back, on the agreed dates. That's why credit rating agencies, such as Moody’s or Standards & Poor’s issue credit ratings, which rate issuers’ ability and willingness to pay the coupons and the principal. Credit ratings can be investment grade, which means you are less likely to lose your capital invested on these bonds, or high yield, which means that it is more likely to lose your capital but in return these bonds also tend to pay a higher rate of interest, or coupon.

Bond investing in Haitong International Securities

Haitong International Securities offers diversified bond investment services with the following unique features:

  • Large variety of fixed income products

  • Minimum investment of USD 100,000 or the equivalent of face value

  • Professional brokers and extensive branch network

  • Timely delivery of e-statement with your latest transaction details

We offer various types of bonds in both primary and secondary markets:

  • Fixed rate bonds are issued with a specified coupon rate that remains constant throughout the life of the bond.

  • Floating rate notes are linked to inter-bank rates which are always lower than the coupons.

  • Zero-coupon bonds are issued with no periodic interest at all, but the bonds are issued at a discount of its par value.

For enquiries, please contact your account executive.

Investment involves risks. The price of bonds can and does fluctuate and any individual bond may experience upward or downward movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling bonds. The holder of bonds bears the credit risk of the issuer and has no recourse to Haitong International Securities Group Limited and its subsidiaries.

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