Offshore bonds

A bond is essentially a loan that an investor – you – gives to the issuer of the bond. In return for this loan, the issuer promises to pay interest and return the initial investment when it is due.

Bonds usually feature in every balanced portfolio. This is because they add stability and diversity due to their relatively low volatility compared to other investments.

The income potential from bonds is reflected in the coupon rate. This rate can be fixed or floating, and income payments could be made periodically or at the bond's maturity. A bond reaches maturity at a specified future date. This is when your principal investment will be repaid. 

Bonds are mainly for medium- to long-term investment. So you should be prepared to commit to the full investment term. If you cash-in early, you may get back less than you invested. Also, issuer may also call back earlier than maturity date. Offshore bonds in general are actively bought and sold on the secondary market. So if the market price of your bond is higher than the purchase price, you could sell it to get capital gains.

• A bond's coupon rate depends on the credit quality of the bond issuer. The top-quality bonds are usually issued by governments, followed by bonds from government-linked companies, banks and corporations.
• Non-investment grade bonds and unrated bonds are riskier, but offer potentially higher returns due to the higher risk premium.
• New bond issues may have an effect on the value of current bonds, and therefore your earned interest income. Interest rate risk increases proportionately with the length of bond maturity.
• Your bond value may decrease over a longer term due to inflation.
• Exchange rate movements could cause fluctuations in your return if your bond is issued in a foreign currency.
• If a bond issuer defaults due to financial difficulties, you may run the risk of losing your investment.
• Important information about ESG and sustainable investing
  In broad terms “ESG and sustainable investing” products include investment approaches or instruments which consider environmental, social, governance and/or other sustainability factors to varying degrees. Certain instruments we classify as sustainable may be in the process of changing to deliver sustainability outcomes. There is no guarantee that ESG and sustainable investing products will produce returns similar to those which don’t consider these factors. ESG and sustainable investing products may diverge from traditional market benchmarks. In addition, there is no standard definition of, or measurement criteria for, ESG and sustainable investing or the impact of ESG and sustainable investing products. ESG and sustainable investing and related impact measurement criteria are (a) highly subjective and (b) may vary significantly across and within sectors. HSBC may rely on measurement criteria devised and reported by third party providers or issuers. HSBC does not always conduct its own specific due diligence in relation to measurement criteria. There is no guarantee: (a) that the nature of the ESG/sustainability impact or measurement criteria of an investment will be aligned with any particular investor’s sustainability goals; or (b) that the stated level or target level of ESG/sustainability impact will be achieved. ESG and sustainable investing is an evolving area and new regulations are being developed which will affect how investments can be categorised or labelled. An investment which is considered to fulfil sustainable criteria today may not meet those criteria at some point in the future. 
  When we classify an investment product or service against our ESG and sustainable Investing (SI) categories described in this document: Enhanced, Thematic or Purpose, this does not mean that all individual underlying holdings in the investment product or portfolio will meet the relevant SI criteria. As such, an SI classification does not mean that all underlying holdings in a fund or discretionary portfolio meet the relevant sustainable investment criteria. Similarly, where an equity or fixed income investment is classified under an Enhanced, Thematic or Purpose category this does not mean that the underlying issuer’s activities are fully sustainable. Not all investments, portfolios or services are classifiable under our SI categories. This may be because there is insufficient information available or because a particular investment product does not meet HSBC’s SI classifications criteria.
  At HSBC, we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. Find out more about our climate strategy.

We have a wide selection of investment-grade bonds with maturity ranging from 1 to 30 years. 

• Government, government agency, corporate, and multi-national institutional bonds 
• Fixed-rate bonds, floating rate bonds, zero-coupon bonds 
• Available in multiple currencies such as USD, EUR, GBP, NZD and AUD among others

The investment-grade bonds we offer are selected by our team of experts. 

Find out more information on investing bond by meeting with our wealth adviser in branch.