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Key Risks

High Yield Bonds - High Yield Bonds (with ratings at or below BB+/Ba1) carry higher risk since they are rated below investment grade, or could be unrated, which implies a higher risk of Issuer default. Further, the risk of rating downgrades is higher for High Yield Bonds in comparison to investment grade bonds.

Callable / Putable Bonds - Callable Bonds have embedded call options which may be exercised by the Issuer, while Putable Bonds have embedded put options which may be exercised by the Investor. These events may result in early unscheduled return of principal on bonds. Investors should note that they may not able to reinvest the amounts received, into other suitable bonds with returns as favorable as that of the pre-existing bonds.

Perpetual Bonds - Perpetual Bonds have no maturity date and pay a steady stream of interest rate forever. Thus these types of bonds usually have a particularly high duration and are very susceptible to fluctuations in interest rates as compared to normal bonds. Perpetual Bonds generally have lower liquidity and many different technical features. Investors need to exercise caution in dealing with Perpetual Bonds.

Subordinated Bonds – Subordinated Bonds have subordinated ranking and in the event of liquidation or insolvency of the Issuer, Investors would only be entitled to be paid after other senior creditors are paid.

Convertible Bonds – Convertible Bonds give the bondholder an option to convert the notional of the bonds into common stock at a predetermined strike price. Hence, under certain circumstances, Convertible Bonds may have a risk profile that closely resembles that of common stock. Investors should note that they are subject to investment risks of both common stock and bonds.

Contingent Capital / Convertible Bonds - Contingent Convertible Bonds have a contingent write down or loss absorption or conversion feature that allow the bonds to be written off, fully or partially, or converted to other type of assets on the occurrence of a trigger event. Hence, Investors holding Contingent Convertible Bonds are exposed to a higher Issuer credit risk in general and may lose the value of their investment substantially as a result of occurrence of the trigger event.

Extendable Bonds – Extendable Bonds have extendable maturity dates and Investors would not have a definite schedule of principal repayment.

Variable-Rate Bonds – Variable-Rate Bonds have variable and/or deferral of interest payment terms and Investors would face uncertainty over the amount and time of the interest payments to be received.

Past performance is not a guarantee of future results. It is not possible to invest directly in an index. For illustrative purposes only. Estimates, forecasts and comparisons are as of the dates stated in the material. This document may also have been made available in a different language, at the recipient’s request, and for convenience only. Notwithstanding the provision of a convenience copy, the recipient re-confirms that he/she/they are fully conversant and has full comprehension of the English language. In the event of any inconsistency between such English language original and the translation, including without limitation in relation to the construction, meaning or interpretation thereof, the English language original shall prevail. The above pricing is for indicative purpose only and there is no guarantee it can be offered at point of execution. “For materials which constitute product advertisement under the Securities and Futures Act and the Financial Advisers Act, this advertisement has not been reviewed by MAS”.

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