Strategy

Risks of Investment

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Product Feature Risk Disclosure

Callable: This security may be called at the discretion of the issuer on the call date (as per the Key Terms). Investors face reinvestment risk when issuer exercises its right to redeem the bond before it matures.

CoCo (with Loss Absorption features) :This is a Contingent Convertible Capital instrument. It has Loss-absorbing feature. It may be written down (fully or partially) or converted to equities on the occurrence of a trigger event: (a) the issuer is near or at the point of non-viability, or (b) its capital ratio falls to a specified level. The risks for Cocos (risk and loss absorption mechanism as per the Key Terms). For more details, please refer to the Product Class Documentation or contact your Relationship Manager. Convertible: You are exposed to both equity and bond investment risk. Liquidity risk may increase during adverse market conditions. 

Deferred Interest: Coupon/interest payments may be deferred or even cancelled at issuer’s discretion. Coupon/interest may be non-cumulative. Exchangeable: This instrument is exchangeable to securities of another company. You are exposed to both equity and fixed income investment risk. Extendable Maturity Date: The maturity date of this security is extendable. Investors would not have a definite schedule of principal repayment. Liquidity risk may increase during adverse market condition. 

Perpetual: It is a perpetual security which means no maturity.

High Yield / Unrated (by Moody’s and/or S&P): This is a sub-investment grade or unrated bond as rated by Moody’s and/or S&P. It may be subject to higher issuer default risk and liquidity risk. Such securities are also more vulnerable to economic cycles as they typically fall more in value than investment grade securities as investors become more risk averse and default risk rises.

Subordinated: In a default, you may receive back the principal only after other senior creditors are paid.

Liquidity risk may increase during adverse market conditions.  

Market Risk (Interest rate risk): Investors bear the risk that interest rate fluctuations may have a negative impact on the value of the fixed-income investment during the term, (Trading Market Risk) : Market Price fluctuatiosin may have negative impact on value of the investment and cause losses of the investment.

Credit Risk (Issuer and guarantor risk) : The credit risk is the danger of the obligor’s insolvency. This may result in partial or total loss of the capital invested.

Liquidity Risk (during adverse market conditions, there may be higher liquidity risk) : The tradability of fixed-income investments depends on whether a price has been established on the market. In an illiquid market, investors run the risk of either having to retain the fixed income investment until the end of the term or selling it before maturity at an unfavorable price. Establishing a fair price and price comparisons can be difficult or impossible as there are sometimes no counterparties on the market who are interested in the investments..

Emerging Market risk: Emerging market economies may react more strongly to changes in economic activity than the economies of developed countries. The markets react in particular to intended and actual changes in monetary policy, government economic and financial policy, and interest or inflation rates.

Secondary Market Risk for 'Private Placements' Medium-Term Notes: Notes may have no established secondary trading market when issued, and one may never develop. If a market does develop, it may not be liquid. Therefore, investors may not be able to sell their notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. Such notes are designed to be held till maturity.

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