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Examples:
Traditional way to invest in bonds
Invest US $ 300,000 to buy China National Offshore Oil bonds, maturity date: 3rd October 2023, bond rating: MOODY'S: Aa3, S & P: AA-, the bid price = 100% (assuming bond prices unchanged) coupon = 4.5% pa
»With a coupon of 4.5% per annum: = US $ 300,000 x 4.5% = US $ 13,500 = 4.5% annual rate of return
Utilizing our Bond Margin Financing service to invest in bonds rated A- or higher bonds
Invest US $ 300,000 to buy China National Offshore Oil bonds, maturity date: 3rd October 2023, bond rating: MOODY'S: Aa3, S & P: AA-, the bid price = 100% (assuming bond prices unchanged) coupon = 4.5% pa
After bond rating and regional risk assessment, CPY can provide 70% margin financing
Buy $ 210,000 of US China National Offshore Oil Bonds though bond margin financing
A total of US $ 510,000 of the China National Offshore Oil Bonds can be bought
Revenue with a coupon of 4.5% per annum = US $ 510,000 x 4.5% = US $ 22,950
Deduct 3% borrowing costs, the annual rate of return = [(US $ 22,950 - US $ 210,000 x 3%) / US $ 300,000] = 5.55% pa
Summary: The annual rate of return to invest bond though Margin financing (5.55%) is higher than traditional method to invest in bonds (4.5%).
Important Notice:
The information is provided by Core Pacific – Yamaichi International (H.K.) Limited (“CPY”) and is solely for your reference. It is not and shall not be construed as an offer, recommendation or solicitation to buy or sell any investment products, nor is it an official confirmation of terms.
Investors should consider and understand their financial positions, investment experience and risk tolerance level before trading. If you have any doubt, please consult your investment advisor and/or other appropriate professional for advice.
The content provided herein in this website is based on information generally available to the public from sources believed to be reliable and true, but no representation is made as to its accuracy or completeness or that any returns indicated will be achieved. CPY expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the content.
Please be noted that some assumptions may be used in relation to any other information provided herein. Changes to assumptions may have a material impact on returns details. Information, prices and availability are subject to change without notice and no representation is made and no responsibility is accepted for.
For risks relating to Bond Margin Financing, please refer to the Fixed Income product Important Notice and Risk Disclaimer.
The information is provided by Core Pacific – Yamaichi International (H.K.) Limited (“CPY”) and is solely for your reference. It is not and shall not be construed as an offer, recommendation or solicitation to buy or sell any investment products, nor is it an official confirmation of terms.
Investors should consider and understand their financial positions, investment experience and risk tolerance level before trading. If you have any doubt, please consult your investment advisor and/or other appropriate professional for advice.
The content provided herein in this website is based on information generally available to the public from sources believed to be reliable and true, but no representation is made as to its accuracy or completeness or that any returns indicated will be achieved. CPY expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the content.
Please be noted that some assumptions may be used in relation to any other information provided herein. Changes to assumptions may have a material impact on returns details. Information, prices and availability are subject to change without notice and no representation is made and no responsibility is accepted for.
For risks relating to Bond Margin Financing, please refer to the Fixed Income product Important Notice and Risk Disclaimer.
