Invest in bonds through Citibank, and you'll enjoy the security of regular interest payments that are generally higher than time deposit rates.

Bonds also provide you with an efficient way of diversifying your investments across countries and corporations, with different levels of risk and returns. You also stand to benefit from capital appreciation should you sell the bond when its price has appreciated.

When you invest into a bond with Citibank, you do not need to worry about keeping the bond safe. Instead, Citibank will keep the bond safely for you and interest received will be credited automaticaly into your account.

Citibank makes bonds available in a variety of currencies, including US Dollars, Australian Dollars and Canadian Dollars.

Minimum investment amount is US$100,000 or its equivalent.

• What are bonds ?
  Governments of countries and large corporations issue bonds when they need to raise funds to finance their operations. When you invest in a bond, you are actually lending money to issuer of that bond.
  
  In return, the bond issue "promises" to pay :
  • a fixed amount of interest (known as coupon) annualy or semi-annually until the maturity of that bond; and
  • the original principal amount borrowed by the issuer of the bond (known as par value) at the bond's maturity.
     
    
• Do I have to hold on the bonds until maturity ?
  No, you need not hold the bonds to maturity as most bonds can be bought and sold anytime. Generally, bond tenures range from 2 to 20 years.
   
  
• When is the best time to invest in bonds ?
  Historically, returns on bonds are higher than returns on traditional time deposits.
   
  Where it is your intention to put aside funds for a period of time, you may consider such factors as the bond's tenure, the credit worthiness of the issuer, its interest rate environment to yield better return.
   
  For those who wish to trade in bonds for potential capital gains, the opportune time to "get in" is when interest rates are falling and inflation is subdued.
   
  Bond prices generally move in the opposite direction to interest and inflation rates. The view is that as interest rates fall, bonds with fixed returns become more attractive to investors.
   
  Conversely, when interest rates rise, bond prices fall. Bonds with longer tenures are more sensitive to changes in interest and inflation rates.
   
  
• What are the risks and can they be managed ?
  Bond investments do have risks. Generally, bonds are riskier than traditional time deposits but less risky than equity investments. There are generally 2 categories of risk:
  • Credit Risk refers to credit worthiness of the bond issuer.
    E.g. "AAA" bonds rate higher (i.e. safer) than "AA" bonds, and will offer lower coupon rates; all else being equal. To manage the risk, choose a bond whose rating and returns best suit your risk and return profile.
  • Market Risk is the risk of bond prices fluctuating as a result of changes in interest rates and inflation outlook.
    Generally, the longer the maturity, the more sensitive the price is to these changes. To manage this risk, monitor interest rate trends and choose the maturity which best suits your risk and return profile.
     
    If you hold the bond to maturity, your capital will not be affected by price fluctuations as the bond issue owes you the par value.
     
    Other risks such as foreign exchange risk may apply if you have invested in a foreign denominated bond.

The information contained herein does not constitute a solicitation or an offer into a transaction. Investment products may not be available in all jurisdictions. Unless otherwise indicated, investment products are not bank deposits, and are not obligations of, or guaranteed by Citibank, N.A., Citicorp or their affiliates and are subject to investment risks, including foreign exchange risks and possible loss of principal amount invested. Past performance is not an indication of, nor a guarantee of future performance. Investment products are not for sale or distribution to US persons.
 
 
 
 
 

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