Investment Solutions

Bonds and Certificate of Deposits

BEA offers the enriched trading capability at bonds and certificate of deposits("CDs") with covering a wide spectrum of debt instruments, such as global developed or emerging sovereigns, investment grade or high yield credits, senior or subordinated issues, and perpetual.

Key Features

Stable Income
Certain bonds and CDs may provide steady cash flow, usually through predictable coupons (subject to terms and features) and get back principal at maturity when the bond has not defaulted.
Enhanced Returns
Certain bonds may offer higher coupon rate than interest rate on an ordinary savings account.
Investment involves in risks:
  • The investment decision is yours and you should not invest in this product unless the intermediary sell it to you has explained to you that this product is suitable for you having regard to your financial situation, investment experience and investment objectives.
  • There is a risk that the issuer may fail to pay the interest or principal to the product holders as scheduled.
  • Price / return may be adversely affected by interest rate fluctuation.
  • The longer the date to the bond’s maturity, the greater the risk that price will fluctuate due to greater chance that something might happen either in market conditions or to the bond’s issuer/guarantor to lessen the value of the bond.
  • Some bonds may not have active secondary market, and may take longer time or impossible to sell to the market and may receive an amount which is substantially less than your original investment amount if you sell it before maturity.

What We Offer

Bonds and CDs are debt instruments, or agreements to repay pre-determined capital and/or interest. CDs are issued by banks while bonds are issued by companies or governments (Issuers) to raise capital. As an investor, it is effectively equivalent to lending money to the Issuers. Most of the bonds/CD trade in over-the-counter (OTC) market, i.e. trading is done directly between two parties, without any supervision of an exchange.

 

Investment Grade Bonds

Bonds with credit ratings Baa3/BBB- or above.


Non Investment Grade Bonds

Also known as high yield bond or junk bond which are bonds with credit ratings at or below Ba1/BB+.


Certificate of Deposits

Offered by banks that offers a coupon rate, which is in general higher than interest on an ordinary savings account.

 
 

Frequently Asked Questions

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A credit rating is an evaluation of the credit worthiness of an issuer. The evaluation is based on the issuer's/ guarantor’s ability to pay coupon as well as repay the loan in full at maturity and the likelihood of default.

Three major independent credit rating services providers are Moody's, Standard & Poor's and Fitch.

 Classification:

  • Investment-grade bond: Bonds with credit ratings Baa3/BBB- or above.
  • Non-investment grade bond: Also known as high yield bond or junk bond. Bonds with credit ratings at or below Ba1/BB+.
  • Distressed bond: Bonds with credit ratings at or below Caa1/CCC+.
  • Unrated bond: Bond not being evaluated by Moody’s, Standard & Poor’s or Fitch


Capital Ranking / Priority of Claims represents the seniority of claims of bondholders in the case of a default.

Senior debt will have higher claim priority to Subordinated Debt and Equity on the issuer's assets in the event of liquidation.

Subordinated bondholders have lower priority of claims than senior bondholders in case of liquidation of the issuer. The holders of subordinated debt could only get back the principal after other senior creditors are paid.

To compensate for the higher risks taken by Subordinated Debt investors, compared to Senior Debt investors, the former often receives higher yields than the latter.



 

  • Investors who are prepared to hold the bond to the maturity date and can assume the risks and bear the potential loss of the bond. As for investors who are prepared to hold perpetual bonds (i.e. without a maturity date), they should understand and bear additional risks other than traditional bonds, including but not limited to redemption uncertainty, coupon resets, payment ranking, conversion triggers and discretionary coupons.
  • Investors who have derivative knowledge (in the case of Convertible Bonds or other Bonds involving derivatives).
  • Investors who have loss absorption product knowledge or experience (in the case of bonds with loss absorption feature).

Know More

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Contact your relationship manager to understand more on your available choices.

Important Notice

Certificate of deposits are not the same nor should it be treated as a substitute for conventional time deposits. Certificate of deposits are not protected deposits under the Deposit Protection Scheme or covered by the Investor Compensation Fund in Hong Kong. 

Investment involves risk. This page does not identify all the risks (direct or indirect) or other considerations, which might be material to you when entering into the transaction. You should consult your own business, tax, legal, and/or accounting advisor(s) with respect to this transaction and you should refrain from entering into such transaction unless you have fully understood the associated risks and have independently determined that the transaction is appropriate for you. Any indicative terms provided to you are provided for their information and do not constitute an offer, or inducement or advice or recommendation to conclude any transaction. No representation or warranty is made that any indicative performance or return indicated will be achieved in the future.

You are reminded that you are responsible for your investment decisions and should read the relevant offering documents and exercise of your own judgment. The advice or opinion expressed by The Bank of East Asia, Limited (the "Bank") is based on certain assumptions. Before entering into a transaction of this type, you should ensure that you have sufficient knowledge and experience, and have received sufficient professional advice to make your own evaluation of the merits and risks of such a transaction. You should make sure you fully understand the risks associated with the relevant product and should also consider your own investment objectives and risk tolerance level.

This page has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of the Bank to any person to buy or sell any security or investment product. The information and analysis contained in this page have been compiled or arrived at from sources believed to be reliable but the Bank does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  

This page has not been reviewed and authorized by any regulators.  

This page serves as a generic description of the product. Individual products launched may come with variations to the basic structure. For further clarification on specific products, please contact your financial advisor or seek for independent advice.