Foreign Bonds - Overseas Bonds | DBS TW Corporate Banking

Foreign Bonds

DBS Taiwan offers a full range of foreign bond investing instruments

Foreign Bonds

DBS Taiwan offers a full range of foreign bond investing instruments

At a glance

Foreign bonds (overseas bonds) are securities issued by foreign governments or large companies to raise long-term and stable funds. The issuer periodically pays pre-agreed interest to investors in return. Unless otherwise contracted, investors can get back the denomination recorded on the bond coupon when the bond matures.

Enjoy fixed income - fixed interest bonds provide coupons regularly

During the possession of foreign bonds, unless otherwise agreed by issuers: except for early redemption or issuer default, you will receive steady interest income regularly, giving you a sense of stability in your pocket.

Guarantee principle at maturity

If the bond is held to maturity, and the issuer has not defaulted upon maturity, the pre-tax settlement amount that can be retrieved at maturity is 100% of the bond face value.

Potential capital gain

Due to the extremely large scale of foreign bonds' secondary market, they bear quite a liquidity. When the market price goes higher than the purchase cost, investors can sell their foreign bonds position prior to maturity to realize the capital gain. In contrast, if investors sell foreign bonds prior to maturity at a price lower than the purchase cost, they may get a loss.

Fee schedule

The total cost of DBS trust Investment in foreign bonds includes:
(a) Subscription fee, (b) trust management fee, (c) service fee

Subscription fee: 1.5% of the trust principal amount, collected at subscription.
Trust management fee: no charge for the first year from the subscription date. Starting from the second year, according to the number of days of settlor’s actual holding period, multiply the mature or early redemption amount by 0.2% annul fee rate and deduct it from the amount the Bank returns to the client at maturity or early redemption. Up to 0.6% of the maturity or early redemption amount shall be charged.
Service fee: calculated based on the residual maturity years between subscription and maturity date of the bond. If less than one year, it shall be calculated on a pro-rata basis according to the actual holding period. The calculation method is: total subscription amount*residual maturity years*annualized rate. The annualized rate shall not exceed 0.5% of the trust principal amount. This fee is embedded in the bond subscription price and paid by the counterpart to the trustee (bank) in one lump sum amount when the client subscripts the bond.

Precautions and Risk Disclosure Warnings

Foreign bonds are investment products, and the risks involved are different from bank deposits. Foreign bonds are not protected by deposit insurance and shall not constitute the obligation of the Bank or its affiliates to guarantee the repayment (except for the Bank or its affiliates acting as the bond issuer or guarantor).
This information is provided for general reference only and is not a recommendation for buying or selling specific bonds or products. The foreign bond product introductory information provided by the Bank are for reference only, and the content is not meant to be any offer or invitation to make an offer, nor does it constitute any investment advice. Details of purchase restrictions, product content, conditions and fee corrections of a specific product, and related rights and obligations shall be handled in accordance with documents such as the trading contract that the Bank and client enter into and product prospectus.
Clients shall understand that investing in bonds may involve major risks such as interest rate risk, exchange rate risk, liquidity risk, early redemption risk, reinvestment risk, delivery and settlement risk, country risk, legal risk, tax risk, etc. The risks disclosed by the Bank merely represent a summary and are not exhaustive of all the trading risks and factors affecting market conditions. Clients shall consult their own finance, tax or legal advisers prior to trading and shall fully understand (a) the product features of foreign bonds and the nature of risks related to investment, and (b) relevant finance, accounting, taxation or legal matters, as well as (c) consider their own financial status and risk tolerance, and then decide whether or not to invest and avoid over concentrate the funds on foreign bonds.
Under general circumstances, bond prices would be affected by interest rate changes in the country where the denominated currency is issued. Generally speaking, when the interest rate of the currency goes up, the market price of the bond may fall and may be lower than the coupon price, which would damage the original investment amount; when the currency interest rate goes down, the market price of the bond may increase. Interest rate changes are often sudden and difficult to predict.
Investing in foreign bonds shall bear the credit risk of the bond issuer: in the worst case, if the bond issuer violates its obligations under the bond, investors will not be able to get any revenue and will lose their entire investment.
Investment is risky. Performance in the past cannot predict those in the future. The Bank does not provide any promise or guarantee for future market performance.
The aforementioned economic trend forecast does not necessarily represent the performance of foreign bonds or other investment targets. Before making any investment decisions, the investors should carefully read the relevant sales documents (including risk factors) of foreign bonds or other investment targets. They should consider if the relevant products or services are appropriate investment targets or consult with financial advisers, and then decide whether or not to make relevant investments or transactions. DBS Taiwan may also revise relevant information from time to time without prior notice.