Investing in Wholesale Bonds & Derivatives
Investing in Wholesale Bonds & Derivatives
At a Glance
Speculative grade bonds
Typically carry a higher risk of default or other adverse credit events as compared to investment grade bonds.
Bond-linked investments
These are structured products which are linked to an underlying bond.
Bond options
Can be sold to generate income.
Speculative Grade Bonds
Benefits
- Steady flow of interest income through the tenor of the bond
- Higher yield compared to Investment Grade bonds
Receive potential higher yield by investing in these speculative grade bonds which typically carry a higher risk of default or other adverse credit events as compared to investment grade bonds.
Speculative Grade bonds are those rated BB+ and below by Standard & Poor’s (S&P) and Ba1 and below by Moody’s. These credit-rating agencies assess the credit risk of the issuer of the bonds, and assign them a credit rating based on information available at the time. Credit risk rating represents the agencies’ opinion on the possibility that the bond issuer may fail to pay what is owed.
These products are suitable for investors with an appropriate risk appetite and speculative bonds may carry higher risks compared to investment grade bonds.
Bond-Linked Investment
Benefits
- The note offers attractive yields in a stagnant or bullish market
- Investors waiting to buy a bond at a lower price can also benefit from an enhanced yield while waiting for the bond price to drop
Bond-linked investments are structured products which are linked to an underlying bond.
You may earn an enhanced yield by taking a view that the underlying bond will not fall below a certain price. Bond-linked notes are issued by financial institutions and investors are exposed to both the issuer’s and underlying’s credit risk.
These products are suitable for investors with an appropriate risk appetite and bond-linked investments may carry higher risks compared to bonds.
Bond Options
Benefits
You may sell bond options to generate income.
- Option premium is collected upfront by the option seller.
- Selling put bond option allows investors to set a strike price lower than the current offer price of the bond in the secondary market.
A "Call" option gives the buyer the right but not the obligation to buy the underlying bond at a predetermined price
A "Put" option gives the buyer the right but not the obligation to sell the underlying bond at a predetermined price.
In both scenarios, the seller of the option is paid a premium by the buyer of the option.
Bond Options are suitable for investors with an appropriate risk appetite.
Eligibility & Fees
For Accredited Investors/Professional Investors only
How to Apply