Why trade bonds with us?
- Access to more than 70 counterparties worldwide
- Access to 9 different currencies globally
- Participation in both primary and secondary bond markets globally
- PhillipCapital network offices in 15 countries and region support price discoveries
- No commissions, competitive spreads
9 currencies available:
Contact our Bond Specialists / schedule an appointment
Learning About Bonds
We recommend opening a Cash Plus account here to trade bonds.
You may get bond prices online via logging into POEMS 2.0 online trading platform, contacting our Bond Specialists at +65 6212 1818, emailing firstname.lastname@example.org, or contacting your Trading Representative/Financial Adviser Representative.
You may place bond trades online on POEMS 2.0 or offline through our Bond Specialists and Trading Representative/Financial Adviser Representatives. Pre-funding of trading account is required, unless it is an indication of interest for new bond issues.
Interested to buy a bond or want to find out more? Talk to our Bond Specialists at +65 6212 1818 or email@example.com. Opening hours: Mon to Fri, 8:30am to 6:00pm, excluding market holidays.
A bond is a debt instrument where investors lend money to an entity, typically a corporate or government body. In return, the borrower/bond issuer pays the lender/bondholder interest, also known as coupon, at a variable or fixed interest rate paid on a regular basis for a defined period of time. When a bond matures, the bond investor gets back the loan amount, also known as the face value, par value, or principal amount.
Principal amount: The amount that the bond investor lends to the bond issuer.
Coupon rate: The coupon is the amount the bondholder will receive as interest payments. Most bonds pay interest semi-annually, while some pay monthly, quarterly or annually. The coupon rate is expressed as a percentage of the principal/face value. If a bond pays a coupon of 5% and its principal/face value is $1,000, the interest pay-out will be $50 per annum.
Maturity date: The maturity date is the date on which the investors will get back the Principal Amount.
Callable Bonds can be redeemed by the issuer prior to the maturity date. This could occur if interest rates are declining. If interest rates have declined since the company issued the bond, they may wish to refinance this debt at a lower rate. In this case, the company might call its current bonds and re-issue new, lower-interest rate bonds.
Corporate Bonds are issued by corporations. Generally, a short-term corporate bond has a maturity of less than five years, intermediate is five to 12 years, and long term more than 12 years.
High-yield Bonds also known as “junk bonds”, are bonds rated below Ba1 (Moody’s), BB+ (S&P) or BB+ (Fitch) because of their high default risk. As its name suggests, high-yield bonds typically offer interest rates higher than investment grade bonds.
Perpetual Bonds are bonds that have no maturity date. In most circumstances, they will have a call date.
Exchange traded bonds are bonds that are listed that investors are able to buy/sell on the stock exchange. They are normally traded in smaller lot sizes compared to the Over-The-Counter (OTC) bonds. Bond prices quoted on the exchange are ‘dirty’ prices (including accrued interest), whereas for OTC bonds, prices are normally quoted as ‘clean’ prices (excluding accrued interest). If you have a Phillip Trading Account, you may login to the POEMS 2.0 online trading platform to trade exchange traded bonds.
Seniority refers to the order of repayment in the event of a sale or bankruptcy of the issuer. Senior bonds will have first claims on the remaining asset as compared to junior (subordinated) bonds. “Pari passu” is normally used to describe the equal debt ranking of new senior bonds issuance versus other senior bonds of a company.
Debt covenants are promises made by the issuer to not engage in certain actions or exceed certain parameters. Some common debt covenants include limitations on debt ratios, ownership of the company and liquidity.
A keepwell agreement is an agreement between the parent company and the subsidiary (which is the issuer), where the parent company agrees to keep the issuing subsidiary in good financial health, usually by maintaining certain financial ratios.
A change of control covenant states that the bondholder has the right to “put” or sell the bond back to the issuer if there is a “change of control” event. Investors should also note the terms and conditions of the bond on what constitutes a change in control event.
Foreign exchange risk is the risk investors are exposed to when they trade in bonds that are denominated in a currency other than the functional currency of the investor. This is caused by fluctuations in foreign exchange rates, which may erode returns on a bond investment.
Liquidity risk is the risk of having a lack of buyers or sellers in the market, which may lead to the investor not being able to execute the trade or may be forced to trade at a value significantly away from the investor’s desired price.
Market risk: The value of a bond is subject to interest rate changes, as well as demand and supply forces. Bonds, in particular, are sensitive to interest rate fluctuations and bond prices tend to move opposite with interest rates movements. This risk is more pertinent if the bond investor decides not to hold the bond to maturity.
Common terms used by bond investors:
|Angel Bonds||Bonds which have credit rating of either Baa3 to Aaa (Moodys), BBB- to AAA (S&P) or BBB- to Aaa (Fitch), or known as Investment grade bonds|
|Ask price||Price which investor acquire the bonds|
|Ask Yield||Yield that the investor received at the price that they invest in the bonds|
|Bid Price||Price which client is able to sell the bonds|
Date where the issuer is able to call back the bonds in part or in full
|Change of Control||
A type of bond covenant which gives the bondholder the right to sell back the bonds to the company at a certain price when there is a change in ownership
|Credit Rating||The credit worthiness of corporate bonds, normally done by the credit rating companies|
The failure or inability of an issuer to pay coupons and/or bond principal.
|Discount||Purchasing the bond at a price less than the face value.|
|Face Value||The nominal value or the dollar value that the investor received at maturity. However, the nominal value might not be the price the investor has to pay|
|Investment-Grade||Bonds which have credit rating of either Baa3 to Aaa (Moodys), BBB- to AAA (S&P) or BBB- to Aaa (Fitch)|
|Junk Bonds||Bonds which have credit rating below Ba1 (Moodys), BB+ (S&P) or BB+ (Fitch)|
|Premium||Buying a bond at price higher than the face value|
|Price||The price paid to buy/sell a bond, normally expressed as a percentage to the face value|
|Principal||The nominal value or the dollar value that the investor received at maturity. However, the nominal value might not be the price the investor pays|
|Re-Fix coupon rate feature||A special feature of some bonds, which allow their coupon rate to be re-fixed in the future|
|Yield||The annualised return the investor expects to receive from investing in a bond. A simple formula would be yield = coupon rate/price|
|Yield to Maturity (YTM)||
The annualised return the investor expects to receive from investing in a bond when they hold to maturity
|Yield to Next Call (YTNC)||The annualised return the investor expects to receive from investing in a bond when the bond is called back by the issuer|
Fees & Charges
We offer competitive spreads and zero commissions.
Bond transfer fees out of PSPL custody is subject to an exit fee of S$100 + 7% GST (applicable to both CDP & Clearstream).
Bond financing rates:
|Bond Portfolio||SGD Financing Rates|
|≥ SGD 250,000||2.68% p.a.|
PSPL may at any time at its sole discretion change the interest rates set out based on prevailing interest rate environment and quality & concentration of securities in your portfolio.
This information is intended for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment products mentioned herein. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs. Investments are subject to investment risks including the possible loss of the principal amount invested. Past performance figures as well as any projection or forecast used in this publication, are not necessarily indicative of future or likely performance of any securities. You may wish to obtain advice from a financial adviser before making a commitment to purchase any investment products mentioned herein. In the event that you choose not to obtain advice from a financial adviser, you should consider whether the investment product is suitable for you. You are also advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at www.poems.com.sg) before investing in this product. This advertisement has not been reviewed or endorsed by the Monetary Authority of Singapore.