Bonds are credit notes issued to you as a bondholder by governments, corporations or other issuers. As a bondholder, you are extending credit to these issuers, who are under obligation to repay the redemption value of the bond upon maturity, and a rate of interest during the life of the bond.

There are many types of bonds from different issuers that vary in their terms. Some examples include the fixed rate bond, floating rate bond, zero coupon bond, callable/extendable bond and convertible bond as well as certificate of deposit.

	Why should I invest in bonds?
	In general, bonds offer comparatively safe returns. At HSBC, we currently offer bonds and certificates of deposit issued by governments, including China, the US and the Hong Kong SAR, local quasi-government bodies, supranationals, and well-known corporations around the world, denominated in major currencies. There is also a wide selection of tenors or terms from which to choose, from one to 30 years with various benchmark yields.
	What factors affect bond prices?
	Prices of bonds correlate with the bond yield, which in turn is directly related to the credit risk of the bond issuer. Credit risk is usually measured by credit ratings assigned by international rating companies such as Moody's and Standard & Poor's. Issuers with higher credit risk may pay a higher yield to attract investors. Changes in the credit ratings will be reflected in the yield and the price of the bond.
	Generally, the prices of bonds move in the opposite direction to changes in the yield. When the bond yield is up, the price falls and when the bond yield is down, the price increases.
	How do I benefit from bonds?
	There is the potential for capital gains when you buy and sell bonds. Steady income is also generated by the interest paid throughout the life of the bond. With HSBC's extensive network in the investment community and a strong bond capacity, competitive pricing can be offered. The bonds purchased under HSBC's custody and nominee service ensures all interest earned is credited to your account. You can also manage your bond investments through your monthly transaction summary and transaction history provided.
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The price of bonds can and does fluctuate, and any individual bond may experience upward or downward movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling bonds.