Grow your wealth and diversify your portfolio with Standard Chartered Bonds/Sukuk Investment

Callable bonds/sukuk allow the issuer to redeem them before maturity on predetermined dates at specific prices. Issuers typically exercise this option when interest/benchmark rates fall significantly, allowing them to refinance at lower rates. Callable bonds/sukuk usually offer higher yields to compensate investors for this added risk.
Non-callable bonds/sukuk cannot be redeemed before maturity by the issuer, providing investors with certainty of income and investment timeframe. Due to this certainty, non-callable bonds/sukuk typically offer slightly lower yields compared to comparable callable bonds/sukuk.

The minimum investment amount for most bonds/sukuk available through Standard Chartered Malaysia is RM 250,000 for Malaysian Government Securities and corporate bonds/sukuk. For foreign currency-denominated bonds/sukuk, the minimum investment typically starts at USD 200,000 or equivalent. These minimums may vary depending on the specific bonds/sukuk issue, so it’s advisable to check with your Relationship Manager for current offerings.

Aside from purchasing newly issued bonds/sukuk from the issuer, you can also purchase bonds/sukuk that are already in the market. This is known as purchasing bonds/sukuk from the secondary market. The price you will be required to pay would be the accrued interest/return on the bonds/sukuk as well as its market value.
Example: Investor A buys a bonds/sukuk in the primary market with a face value of RM1,000 and a coupon/return of 5%. After 90 days, Investor A sells the bonds/sukuk to Investor B at the market price of RM950.
Investor B would have to pay: Market value of bonds/sukuk + accrued interest/return of bonds/sukuk over 90 days = RM950 + (RM1,000 x 5% x 90/365) = RM950 + RM12.33 = RM962.33 is the amount Investor B pays Investor A when he purchases the bonds/sukuk from the secondary market.
For more accurate Accrued Interest/Return calculation of a specific bonds/sukuk, do check with your Relationship Manager.

Yes, you can sell bonds/sukuk before maturity provided the Bank is able to locate a buyer in the secondary market. The process involves:

• Contacting your Relationship Manager to express your intention to sell.
• Receiving a quote based on current market prices (which may result in capital gain or loss)
• Confirming the trade if the price is acceptable.
• Settlement typically occurs within T+2 business days.

Please note that liquidity varies by bonds/sukuk type, and you may receive less than your original investment depending on market conditions at the time of sale.

Bonds/sukuk prices generally move in the opposite direction to interest/benchmark rates:

• When interest/benchmark rates rise: Existing bonds/sukuk prices fall as newer bonds/sukuk offer higher yields.
• When interest/benchmark rates fall: Existing bonds/sukuk prices rise as they become more attractive compared to new issues.

This inverse relationship is measured by duration—the higher a bonds/sukuk’s duration, the more sensitive its price is to interest/benchmark rate changes. For example, a bonds/sukuk with a duration of 5 years will decrease approximately 5% in value if interest/benchmark rates rise by 1%.

• Credit risk or default risk: You should select a bonds/sukuk that is issued by a credible issuer to ensure that full and timely payments can be made to you. If the bonds/sukuk issuer is unable to make interest or principal payments when due, as per the bonds/sukuk agreement, the issuer is said to be in default, and the investors may not recover their full investment capital.
• Interest/Benchmark rate risk: Bonds/sukuk prices have the tendency to move inversely with interest/benchmark rates. This may have an effect on your investment, due to the rise and fall of the bonds/sukuk price, should you decide to sell the bonds/sukuk before its maturity.
• Liquidity risk: Each and every bonds/sukuk comes with a maturity date. You will need to be prepared to hold the bonds/sukuk till maturity. However, should you need to liquidate your investment at short notice you may experience difficulty in finding a buyer and may therefore have to sell at an unfavourable price.
• Currency risk: With foreign currency bonds/sukuk, you need to be aware of your exposure to currency risk. This is the possibility that the value of the investment may be adversely affected by currency fluctuation movements through a devaluation of the base currency versus the reference currency, resulting in potential losses.

Bonds/sukuk are rated by independent agencies to assess the issuer’s creditworthiness:

• In Malaysia: RAM Ratings and Malaysian Rating Corporation Berhad (MARC).
• Internationally: Moody’s, Standard & Poor’s, and Fitch

Ratings typically range from AAA (highest quality) to D (in default). Investment-grade bonds/sukuk (BBB- and above) indicate lower default risk, while speculative or high-yield bonds/sukuk (BB+ and below) carry higher risk but potentially higher returns. Standard Chartered provides these ratings to help investors assess the credit risk associated with each bonds/sukuk offering.

Inflation erodes the purchasing power of fixed coupon/return payments over time. For example, a bonds/sukuk paying 4% when inflation is 3% provides a real return of only 1%. Rising inflation can also lead to higher interest/benchmark rates, which typically causes bonds/sukuk prices to fall.
To protect against inflation:

• Opt for shorter-term bonds/sukuk which are less sensitive to inflation changes.
•  Diversify with floating-rate bonds/sukuk that adjust periodic payments based on prevailing interest/benchmark rates.

Standard Chartered typically charges:

• Custody fees: Subscription fees.
• Early redemption fees: May apply when selling bonds/sukuk before maturity.
• Foreign exchange fees: Applicable when investing in foreign currency bonds/sukuk

We recommend consulting with a tax professional for advice specific to your situation.

Bonds/sukuk are valuable components of retirement planning because they provide:

• Stable, predictable income through regular coupon/return payments.
• Capital preservation potential, especially with high-quality bonds/sukuk held to maturity.
• Portfolio stabilisation by offsetting stock market volatility.

Financial advisors typically recommend increasing bonds/sukuk allocation as you approach retirement. Standard Chartered offers retirement planning services that can help determine the appropriate bonds/sukuk allocation for your age, risk tolerance, and retirement goals.

Standard Chartered provides several tools to monitor your bonds/sukuk portfolio:

• SC Mobile app and Online Banking platform showing current holdings, market values, and accrued interest/return.
• Monthly consolidated statements detailing transactions and valuations.
• Personalised portfolio reviews with your Relationship Manager.
• Regular market updates and investment outlook reports.

For comprehensive performance assessment, consider both income received (coupon/return payments) and any changes in market value of your bonds/sukuk.