Bond Investing: Returns Within Reach

Interest Rate Risk

• The most important factor affecting bond price fluctuations is the market interest rate.
• In theory, market interest rates and bond prices move in opposite directions.

Time to Maturity

• Bonds with longer maturities are generally more sensitive to changes in interest rates and therefore experience greater price fluctuations.
• Bonds with shorter maturities tend to have smaller price fluctuations.

Credit Rating (Credit Risk)

• Bonds issued by companies with higher credit ratings (lower risk) tend to have smaller price fluctuations and lower yields (interest rates).
• Bonds issued by companies with lower credit ratings (higher risk) tend to have larger price fluctuations and higher yields (interest rates)

Coupon Rate

• Bonds with lower coupon rates are generally more sensitive to interest-rate changes and tend to experience greater price volatility.
• Bonds with higher coupon rates are generally less sensitive to interest-rate changes and tend to experience smaller price volatility.

Other Factors

• In addition to the major factors above, bond prices and yields may also be affected by: Market supply and demand, inflation changes, exchange-rate fluctuations, political risks and speculative trading and market sentiment.

Foreign bonds are fixed-income investments that provide investors with regular interest payments and the repayment of principal at maturity, offering a relatively stable source of cash flow. In contrast, stocks represent ownership in a company, and returns are generated through share price appreciation and dividend payments. Stocks generally involve higher risk and higher return potential. Additionally, bondholders are creditors of the issuer and typically have priority over shareholders in receiving repayment if the company encounters financial difficulties.

Including foreign bonds in an investment portfolio can help diversify market risk, broaden sources of return, and provide exposure to opportunities created by changes in global interest rates and exchange rates. Foreign bonds can also help reduce overall portfolio volatility, improve portfolio stability, and balance income generation with long-term growth potential, making them a useful component of a well-diversified investment strategy.

• Market risk: Bond values are determined by the credit rating of the issuer, credit spread, and market interest rate, while bond income is determined by the fixed income or capital gains on rising bond prices. Based on the issuer’s credit rating, there may be differences in the security and volatility, and investment returns and risks can also vary because of market performance.
• No maturity risk: If the investment target is perpetual securities with no maturity day, unless otherwise agreed, the issuer is not obligated to redeem such securities, and the Investor has no right to request the issuer to redeem such securities.
• Issuer’s early redemption risk: If the issuer exercises the right to redeem bonds earlier, it will shorten the expected investment period.
• Reinvestment risk: If the issuer exercises the right to redeem bonds earlier, the Investor will have reinvestment risks from reinvesting the investment principal along with accumulated interest in other appropriate products with similar return and maturity.
• Investor’s early redemption risk: If a bond is not involved in any default, the issuer will redeem 100% return of the bond face value based on the product terms on the maturity date. If the Investor intends to redeem bonds earlier, the redemption must be processed at the actual deal price then on the secondary market, which may lead to a loss of principal. Therefore, if the Investor chooses to perform early redemption when the market price is falling, the Investor may suffer loss(es).
• Interest rate risk: The marked-to-market value within the duration of bonds could depend on the interest rate changes of the issuing currency; when its interest rate rises, the marked-to-market value of the bond may decrease and incur losses to the original investment amount; when its interest rate falls, the marked-to-market value of the bond may rise accordingly and thereby bring extra gains.
• Coupon risk: If force majeure events occur to the issuer of the bond, the issuer has the right to decide whether to allocate interest or not for the product continuously.
• Liquidity risk: Bonds may not have sufficient market liquidity. Transaction completion cannot be guaranteed for instructions of excessively low amounts early redemption. When market liquidity or transaction volume is low, a significant spread may be generated between a bond’s actual transaction price and its asset value, which may result in losses of the original investment amount if the Investor redeems the bond before its maturity. Moreover, once the market completely loses its liquidity, the Investor will have to hold the bond until its maturity date.
• Credit risk: The Investor shall assume the credit risk associated with the bond issuer or guarantor (if any). Credit risk refers to a situation when the bond issuer or guarantor (if any) fails to pay bond coupon, principal, or perform its other bond duty; whereas the evaluation of “credit risk” is dependent upon the Investor’s evaluation of the credit rating of the bond issuer or guarantor (if any). Credit ratings may change. The credit rating of any bond issuer and guarantor (if any) or the bond merely reflect independent opinions on the credit values of rated entities or bonds from relevant credit rating agencies rather than guarantee of credit qualities of the bond issuer and guarantor (if any) or the bond.
• Currency exchange risk: A foreign bond is an investment product denominated in a foreign currency. If the Investor invests in the bond with currencies such as TWD or one that is not the product’s denominated currency, it is necessary to be aware of the risk of currency exchange upon returning accrued foreign currency interest and investment principal of assets converted back to TWD or a currency other than such foreign bond’s denominated currency may be lower in value than the invested principal.
• Country risk: If force majeure events such as wars or natural disasters occur in the country in which the issuer or guarantor (if any) of the bond is registered, such situations may cause the Investor losses.
• Event risk: A major unexpected incident involving the issuer or guarantor (if any) may lead to downgrades to the issuer’s credit rating.
• Settlement risk: If emergencies, extraordinary situations, market volatility factors, or changes to settlement rules on holidays occur in the country in which the bond issuer or guarantor (if any) is registered, or in the location of the exchange of the linked investmen t products, or the delivery versus payment (DVP) settlement institution, settlement will be temporarily suspended or delayed.
• Inflation risk: Inflation will lead to a decrease in the bond’s real income.
• Taxation risk: The taxation laws applicable to the issuer and the Investor will affect the bond Investor’s income. The Investor shall assume bond-related taxes, including (but not limited to) stamp duty or other taxes generated from the bond or charges that may be collected. Generally speaking, the issuer will not pay additional amount to compensate any taxes, expected taxes, or withholding taxes or deducted amount deducted by the issuer or the payment agencies. If there are any changes in applicable taxation laws, the bond income may fall short of expectations. The Investor shall consult his/her own tax and accounting consultant before agreeing or deciding to purchase the bond.

You can place foreign bond orders during the bank's business hours by contacting your dedicated Relationship Manager.

Standard Chartered leverages its global market research resources to provide a carefully selected range of foreign bonds across different currencies and maturities. Investors can flexibly construct their portfolios according to their financial goals and investment needs to generate stable interest income.

Yes. Investors can access foreign bond ETFs through Standard Chartered's overseas securities platform. By searching for the keyword "bond" in the Overseas Securities ETF Product List, investors can find relevant bond ETFs.

Investors should pay attention to exchange-rate risk, as fluctuations in currency exchange rates can directly affect investment returns.

The minimum subscription amount is generally USD 20,000. If the minimum order amount specified in the product's offering documents exceeds USD 20,000, the amount stated in the offering documents will prevail.

A trust fee is charged for foreign bond investments. The subscription fee rate is 2%, which is calculated based on the trust principal amount at the time of subscription according to the applicable fee schedule. In addition, a distribution fee of 0.5% per annum is generally charged at the time of subscription and is calculated based on the investment amount, the remaining term of the foreign bond, and the applicable annual fee rate.