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A woman and her cat are relaxing in an apartment; image used for bonds/CDs product

Bonds / Certificates of Deposit

Enjoy steady income generated by the interest paid throughout the life of the bond / certificate of deposit

Important Risk Warning 

  • A bond is an investment product. The investment decision is yours but you should not invest in this product unless the intermediary who sells it to you has explained to you that the product is suitable for your financial situation, investment experience and investment objectives.
  • Bonds and Certificates of Deposit (CDs) are NOT equivalent to a time deposit. A CD is not a protected deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
  • Issuer's Risk - Bonds and 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, you might not be able to recover the principal and any coupon if the issuer defaults on the bond and CD.

Additional risks are disclosed in the Risk section. Please refer to it for details.

Enjoy stable and predictable investment income

While it's important to save up some liquid cash for emergencies, getting bonds / certificates of deposits (CDs) in your portfolio can offer you a better return than leaving all your cash in your savings account.

At HSBC, we have several different types of bonds/CDs for our customers:

  • Bonds
    Bonds issued by governments, including China, the US and Hong Kong, local quasi-government bodies, supranationals and well-known corporations around the world denominated in major currencies.
  • CDs
    CDs issued by different high credit quality financial institutions like banks.
  • Initial Public Offering (IPO)
    We also offer Initial Public Offerings (IPO) of bonds/CDs.

Key benefits

  • Bonds/CDs pay a steady and predictable income generated by interest throughout their life
  • A potential for capital gains when you buy and sell bonds/CDs
  • Your principal is protected at maturity so long as issuer does not go default
  • Wide selection of tenors or terms to suit your needs, from 1 to 30 years

For more information, read our "Why consider" fact sheet and latest update on product risk ratings.

How do bonds/CDs work?

Here is a simple example to show how you can earn stable interest income with a bond/CD.

Illustrative example

Mr. Chan purchased the following bond on 6 Jan Year 1
Face value Offer price
 Coupon rate
 Coupon frequency
 Maturity date  Initial payment

USD100,000

 

 98% 3% Annually
 1 Jan, Year 3
 purchase amount USD98,000 + accrued interest* USD41.67 = USD98,041.67
Mr. Chan purchased the following bond on 6 Jan Year 1
Face value

USD100,000

 
Offer price
 98%
Coupon rate
 3%
Coupon frequency
 Annually
Maturity date  1 Jan, Year 3
Initial payment
 purchase amount USD98,000 + accrued interest* USD41.67 = USD98,041.67

*Accrued interest : USD100,000 x 3% x 5 days/360 days = USD41.67 for receiving/releasing the bond holding 5 days after last interest payment date

Mr. Chan will receive an interest payment of USD3,000 (USD100,000 x 3%) on 1 Jan, Year 2. On 1 Jan, Year 3, Mr. Chan will receive the final coupon payment of USD3,000 plus USD100,000 face value.

Illustration showing the scenario that Mr.chan holds the bond for 2 years till maturity.

Face value: USD100,000

Total coupon payment: USD100,000 x 3% x 2 years = USD6,000

Total return: USD100,000 + USD6,000 - USD98,041.67 = USD7,958.33

Return = 3.98% p.a.

Scenario 1: Holds the bond for 2 years till maturity 

Scenario 2 : Sells the bond after 1 year when market price = 102% 

Scenario 3: Sells the bond after 1 year when market price = 94% 

Fees

Service charges of Bonds/CDs
Service charges  Handling fees
Safe custody
 Waived
Interest Collection  Waived 
Redemption at maturity  Waived 
Transfers into HSBC1 Waived 
Transfers out of HSBC1

Through Central Money Market Unit (CMU): HKD500 per note/bond per transfer.

Through Euroclear/other overseas clearing houses/bank: HKD1,000 per note/bond per transfer
Service charges of Bonds/CDs
Service charges  Safe custody
Handling fees Waived
Service charges  Interest Collection 
Handling fees Waived 
Service charges  Redemption at maturity 
Handling fees Waived 
Service charges  Transfers into HSBC1
Handling fees Waived 
Service charges  Transfers out of HSBC1
Handling fees

Through Central Money Market Unit (CMU): HKD500 per note/bond per transfer.

Through Euroclear/other overseas clearing houses/bank: HKD1,000 per note/bond per transfer

1. Customers will need to pay if there are any out of pocket costs incurred.

FAQ

How can I buy bonds/CDs at HSBC? 

Do I need a large sum of money to buy bonds/CDs? 

Bonds/CDs are mainly medium- to long-term fixed income products, not for short-term speculation. You should be prepared to hold your bonds/CDs for the full tenor; you could lose part or all of your principal if you choose to sell the bond/CD prior to maturity.

It is the issuer who pays interest and repays principal of bonds/CDs. If the issuer of your bond/CD defaults, you might not be able to receive back the interest and principal. You bear the credit risk of the issuer and have no recourse to HSBC unless HSBC is the issuer itself.

Indicative price of bonds/CD are available, but prices will fluctuate with market changes. Factors affecting market price of bonds/CD 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/CD. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling bonds/CD.

If you wish to sell Bonds/CDs, HSBC may repurchase it based on the prevailing market price under normal market circumstances, but the selling price may differ from the original buying price due to changes in market conditions.

There may be exchange rate risks if you choose to convert payments made on bonds/CD to your home currency.

The secondary market for bonds/CDs may not provide significant liquidity or may trade at prices based on the prevailing market conditions and may not be in line with the expectations of holders of bonds / CD.

If bonds/CD are redeemed early, you might not receive the same rates of return when you use the funds to purchase other products.

 

For renminbi (RMB) products:

There may be exchange rate risks if you choose to convert RMB payments made on the bonds to your home currency.

RMB debt instruments are subject to interest rate fluctuations, which may adversely affect the return and performance of the RMB products.

RMB products may suffer significant losses in liquidating the underlying investments if such investments do not have an active secondary market and their prices have large bid/ offer spreads.

You could lose part or all of your principal if you choose to sell your RMB bonds prior to maturity. 

Risks 

Disclaimer 

Important Note 

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