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Bonds
Bonds investment service with KGI Asia
When you invest in the bond market, you deposit a lump sum of which will be used to increase the value of your investment.
More Flexible and Choices
Invest for sustainble income, growth or both with our wide range of bond options across different bond issuers and currencies.
More Flexible and Choices
Invest for sustainble income, growth or both with our wide range of bond options across different bond issuers and currencies.
Contact Us
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KGI Asia's professional team
Wide range of investment fund options (bond selections).
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Latest market updates
You will be provided with the latest bond market updates and daily information.
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Bonds Overview
KGI has extensive experience in helping our clients to choose their suitable bonds, which include different bond issuers and currencies. We also provide clients with the latest bond market updates and information.
Sovereign Debt
Sovereign debt refers to bonds issued by the government's financing departments or agencies. Sovereign debt can be a bond issued by a company with a close relationship to or supported by the government.
Main Risks
- Sovereign debts and pursed sovereign debts usually have higher ratings, and the default risk is relatively low.
- Price fluctuations are mainly affected by macroeconomics.
- Longer bond duration increase interest rate sensitivity.
Investment Grade
Bonds with credit ratings above Baa3 / BBB- (inclusive) are better rated bonds and are suitable for stable investors.
Main Risks
Bondholders are exposed to a variety of risks, including but not limited to:
- Rating risk - bonds are subject to the risk of the issuer defaulting on its obligations. It should also be noted that credit ratings assigned by credit rating agencies do not guarantee the creditworthiness of the issuer;
- Liquidity risk - some bonds may not have active secondary markets and it would be difficult or impossible for investors to sell the bond before its maturity;
- Interest rate risk – Sovereign investment bonds are more susceptible to fluctuations in interest rates and generally prices of bonds will fall when interest rates rise.
- Repurchase risk: When bond issuers exercise repurchase rights before the bonds mature, investors face reinvestment risks.
High Yield Bond
Bonds with a credit rating below Ba1 / BB+ (inclusive) are higher risk bonds.
Main Risks
In addition to the general risks listed in investment grade bonds, there are other risks and complex features, including but not limited to the following:
- Higher credit risk: High-yield bonds are usually rated below investment grade or are not rated at all and the issuer's default risk involved is often higher.
- Subject to economic cycle changes: When there is downturn economy, the prices of high-yield bonds tend to fall more than investment-grade bonds because of the increased risk of default.
- Multi-guaranteed / cross-guaranteed (non-single-credit-backed) bonds, in which these support providers (multiple guarantors) may not have significant operations or their support may be subordinated.
Perpetual Bonds
Bonds without maturity, but usually comes with clauses for early redemption clauses and reset of coupons levels.
Main Risks
Perpetual bonds have additional risks and complex characteristics including (but not limited to) the following:
- Perpetual bonds (Perp): Bonds have no maturity date, and generally watch out for any early redemption clauses.
- Floating rate coupon can be reset (change): coupon can be reset on reset date, based on benchmark (such as LIBOR or Treasury rate) + fixed credit spread.
- Coupons can be deferred (accumulative or non-cumulative): is a common feature in perpetual bonds, while the bank's Contingent Convertible Bonds (CoCo) coupons must be deferrable and non-cumulative.
Convertible Bonds
If the stock price exceeds the conversion price, bonds are convertible to ordinary shares, otherwise be held as ordinary corporate bonds with a floor.
Main Risks
- Normally comes with low or zero coupons. There may exist of buyback clauses, and Puttable clauses for investor rights.
- CBs also comes with interest rate risk, credit risk, liquidity risk.
Specific terminology of convertible bonds (CB)
- Face Amount (Denomination)
- Coupon rate
- Issue date / issue price
- Maturity Date / Maturity Redemption Price
- Conversion Price
- Conversion ratio = face amount / conversion price
CoCo Bond
It is usually issued by a bank or financial institution. Capital Securities (CoCos) are hybrid capital securities that absorb losses when the capital of the issuing bank falls below a certain level.
Main Risks
In addition to risks arising from general bonds trading, the risks involved in CoCo Bond include (but not limited to):
- Subordinated bonds: the order of claim goes after senior debt, but prior to common stock (AT1 and T2)
- Loss-absorbing Capacity: bonds have contingent write down or loss absorption feature and the bond may be written-off fully or partially or converted to common stock on the occurrence of a triggered event.
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Structured Product
Various Structured Products to enhance your investment return. Visit this section to learn more.
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