• Enjoy the security of regular interest payments that are generally higher than time deposit rates.
• Enjoy capital gain if you sell when bond prices appreciate
• Diversify across countries and corporations

What You Get

• Choice of diversifying across countries and corporations
• Different levels of risks and returns
• Capital appreciation if you sell when price has appreciated
• Custodian services
• Choice of currencies: AUD, CAD, Euro, GBP, NZD, SGD, USD
• Tenures up to 10 - 30 years

What You Need

• Minimum US$100,000

How To Apply

Submit the following:

• Personal Investment Profile (Investment Funds & Securities)
• Structured Note Transactions Agreement
• W-8BEN

Or if you are not a customer, please submit:

• Account Opening Application
• Photocopy of your passport
• Most recent original copy of your current bank statement

Important:
Citibank N.A., S’pore Branch acts as Riskless Principal in buying the note on your behalf.

These bonds / notes are obligations only of the issuer. These products are not bank deposit, are not government insured, are not obligations of nor or guaranteed by Citibank, N.A. / Citigroup Inc. or their affiliates (except in the case that Citigroup Inc. or any of their affiliates is the issuer of these products) and are subject to investment risks, including possible loss of the principal amount invested. Past performance is not indicative of future results, prices can go up or down. Investors investing in bonds / notes denominated in non-local currency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. This document does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom it is unlawful to distribute such a document or such an offer or solicitation. These bonds / notes are not available to U.S persons.

• What are bonds?
• An example: Returns on the bond
• Why invest in bonds?
• When is the best time to invest?
• Types of bonds
• What are the risks?
• What if I hold the bond until maturity?
• Why invest with Citibank?
• Custodian services

When you invest in a bond, you are actually lending money to the issuer of that bond. Bonds are also called “Fixed Income” securities because when you own a bond, you will receive a fixed amount of interest payment (called the coupon) regularly (typically 6 monthly or yearly) from the bond issuer until the bond matures. At maturity, the issuer will repay you the principal, which is the amount borrowed by the issuer. The bond also matures at the Par Value, which is usually at $100.

As most bonds are tradable securities, the bondholder can either hold a bond until maturity or sell it before maturity at the prevailing market price.

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This bond pays coupon twice a year. This means that on every March 15 and September 15, you will be receiving fixed interest payment of US$7,250 [ (5.8% x $250,000) / 2 ].

At maturity on Mar 15 2004, the bond issuer, Citigroup, will pay you the final interest of US$7,250 + the principal of US$250,000.

But, should you decide to sell the above bond on March 15, 2002:

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Why invest in bonds?

• You enjoy the security of regular interest payments that are generally higher than time deposit rates.
• You have the chance to benefit from capital appreciation should you decide to sell the bond when the price of the bond has appreciated (please note that prices can also decline).
• Bonds allow you to fully diversify your investment portfolio if you have a portfolio consisting of only stocks.

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When is the best time to invest in bonds?
You can invest in bonds anytime. Returns on bond investments are generally higher than returns on time deposits.

However, if you are looking for the opportunity to make capital gains, the best time to invest in bonds is when you expect interest rates to fall. This is because bond prices generally move in the opposite direction to interest rates.

But do you stay away from bonds when interest rates are on the rise? Not really. When interest rates are rising, you can choose to invest in Floating Rate Bonds.

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Types of Bonds
Fixed Rate Bond – known coupon interest until the maturity of the bond.

Floating Rate Bond – coupons are variable and are frequently adjusted to reflect prevailing market interest rates. The advantage is that it provides the investor with a return commensurate with the prevailing market rate. When investing in Floating Rate Bond, the investor is taking the bond issuer’s credit risk. Compared to Fixed and Zero Coupon Bonds, Floating Rate Bonds are less risky investments.

Zero Coupon Bond – no interest payable throughout the life of the bond. The offer price is usually at a deep discount (e.g. purchase at US$70 and matures at US$100 in 5 years.)

Callable Bond – gives the issuer the option to redeem it before maturity on specific dates at specific prices. Due to this callable feature, the coupon rate is usually higher. The best time to buy a callable is when interest rates are expected to remain flat.

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What are the risks and how to control them?
As with any investment, bonds also carry risk. Comparing deposits, high credit quality bonds and stocks, deposits rank the safest followed by high credit quality bonds. Stocks are the highest in terms of risk.

• Credit Risk measures the credit worthiness of the bond issuer; as determined by international rating agencies such as Standard & Poor’s and Moody’s. “AAA” bonds are of the highest credit worthiness. In other words “safer” than a “AA” rated bond.
  
  All else being the same, a “AA” bond will offer a higher interest rate than a “AAA” rated bond, as the former has to compensate the investor for taking on a higher credit risk. Therefore, to control credit, you should choose the bond whose rating and return best suit your risk and return profile.
  
  
• Market Risk is the risk of bond prices fluctuating as a result of changes in interest rates and inflation outlook. You will remember that generally when interest rates fall, bond prices will rise. Conversely, when interest rates move up, bond prices will fall. Generally, the longer the maturity, the more sensitive the price (e.g. 5 years bond prices change in larger magnitude than that of 2 years). Therefore, to monitor and control the level of risk, you should carefully monitor interest rate trends and choose the maturity which best suits your risk and return profile.
  
  
• Currency Risk is the fluctuation in the exchange rate of the bond currency in relation to your home currency. E.g. if your base currency is USD and you bought an AUD bond, the movement in the AUD/USD exchange rate would result in changes in the USD equivalent of your investment.

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What if I hold the bond until maturity?
If you hold your bond till maturity, your capital* would not be affected by price fluctuations because the issuer will repay you the full value (principal amount) of the bond.

*Please note that repayment of principal is subjected to the credit risk of the issuer.

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Why invest with Citibank?
At Citibank, we have made available to you a wide selection of quality bonds issued by reputable institutions worldwide. You can choose from bonds of various currency denominations and tenures that best meet your investment objectives. To help you make the most of your bond investments, we provide useful market updates and professional analyses for your reference.

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Custodian Services
When you invest into a bond with Citibank, you do not need to worry about keeping the bond safe. Instead, Citibank will keep the bond safely for you and interest received will be credited automatically into your account.