A bond is an interest-bearing security issued by a government or corporation (as borrower) with a promise to pay the bondholder (as lender) coupon or interest on specified due dates.
Safe and secure. Investing in bonds is safer than investing in equities or stocks because bondholders have priority over shareholders. In a worst-case scenario such as bankruptcy, the creditors, including bondholders, usually get at least some of their money back. On the other hand, shareholders often lose their entire investment. Government securities carry a lower risk as these are backed by the Philippine government.
Higher and pre-determined rate of return. The interest earned from bonds is pre-determined by the issuer regardless of fluctuations in market rates. Since bonds generally have longer terms, the return is also higher than that of short-term investments.
Periodic interest payments. Interest is paid out at fixed intervals (usually quarterly or semi-annual) with a pre-determined rate for better flexibility to match expected future expenses.
Capital gains potential. Depending on market conditions, bonds may be sold at a price higher than the purchase price, thereby resulting in capital gains.
Liquidity. Bonds, especially those that are government-issued, are actively traded in the market and thus readily converted to cash. A bond may be sold back before its maturity date subject to prevailing market prices.
Individuals and institutions (i.e. corporations, associations, organizations) who are looking for a good investment alternative can invest, subject to a suitability assessment.
You must first accomplish pertinent account opening documents by visiting the nearest China Bank branch in your area.
You must have a China Bank savings or checking account before you can invest in bonds. Your account will be debited for the purchase of bonds and credited for interest payments.
For US Dollar-denominated bonds, the minimum investment amount is $10,000.
For Peso-denominated bonds, the minimum investment amount is P500,000.