Investing in Bonds
Select brokerage type:
Equities | Bonds
Buy and sell bonds with our International Brokerage Service
Citi International Personal Bank can help you to trade Bonds across the world, helping you to diversify your portfolio and spread your risk across a wide range of currencies, locations and market sectors.
Take advantage of our International Brokerage
| Already a client? | Interested in joining us? |
What are Bonds?
By investing in bonds, you are effectively lending money to a company or institution and they promise to repay that debt. Sometimes you specify a fixed rate of interest (known as the coupon) to be repaid at an agreed time in addition to the original sum (known as the principal). But there is a wide range of Bonds and some come with variable rates of interest and no maturity date.
Bonds are normally issued by companies or governments and are normally traded between brokers on the Over the Counter (OTC) market. You can transact bonds via your Relationship Manager on both an Advisory basis and Execution Only basis as well as on an Execution Only basis Online.
Understanding levels of risk
You should be aware that when investing in bonds, there is a risk that the company or institution may default and, since you are effectively a creditor, you may not necessarily get your money back.
A bond's credit rating is rated by independent credit rating agencies on the basis of how likely it is that the issuer will default. Investment grade bonds indicate a lower likelihood of collapse and High Yield bonds, also referred to as Junk bonds; indicate a higher likelihood of collapse. Government bonds are normally regarded as lower risk compared with corporate bonds and Emergent market bonds normally have a higher risk of default compared with non Emergent market bonds. Please note that these are general observations and there are a number of other additional risks associated with bond investments that you need to be aware of prior to investing in bonds, for example; Market Risk, Settlement Risk and Liquidity Risk.
Examples of bonds
Please note: These are examples only as of 17th of February 2014 and they are not recommendations or advice.
For example, a corporate bond issued by Johnson & Johnson, with a AAA credit rating by S&P and Aaa by Moody’s, USD denominated with a coupon of 6.54% and maturity date of 01/09/2020 has an ask price of 103.45 and a yield to maturity of 2.38% over one year. A bond with a lower credit rating would normally have a higher yield to reflect the higher risk of the investment.
Another example is a bond issued by BAE Systems with a BBB+ credit rating by S&P and Baa2 by Moody’s. GBP denominated with a coupon of 4.13% and a maturity date of 08/06/2022, with an asking price of 102.28 and a yield to maturity of 3.80% over one year.
What you can trade
With our International Brokerage service you can buy and sell bonds from our extensive range of investment grade, government and emerging market bonds.
Bonds are available in a wide range of currencies Including USD, EUR, GBP, AUD, CAD, NZD, DKK, SEK, NOK, CHF.
You can transact bonds via your Relationship Manager on both an Advisory basis and Execution Only basis as well as on an Execution Only basis Online.
We offer access to the following type of bonds:
- Zero Coupon bonds
- Fixed Coupon bonds
- Floating rate bonds / notes
- Perpetual bonds
- Convertibles
- Government bonds (US bonds, UK gilt and European bonds)
- Corporate (high grade)
- Emerging market (Eurobonds and Yankees by sovereigns and corporate)
The minimum amount required to invest via our brokerage service is US$10,000 (or currency equivalent) for each transaction.
You can also use our international brokerage service for equity trading and to gain access to other financial products.
Take advantage of our International Brokerage
| Already a client? | Interested in joining us? |
