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SHK Launches Multi-Currency Mini-Bond Linked to HSBC Shares

Strategic Insights

— 2 min read

Sun Hung Kai Financial Group (SHK) is offering investors a new type of bond with yield-boosters linked to the performance of HSBC shares. The bond, part of SHK's latest launch, is a multi-currency mini-bond "credit-linked" to China and the bonds of six major companies. This innovative offering allows investors to benefit from the growth of HSBC's share price while providing a fixed-rate return. SHK will offer two types of bonds, each with different coupon rates and yield-boosters linked to HSBC's share price.

Key Takeaways:

  • SHK is launching a new type of bond with yield-boosters linked to the performance of HSBC shares.
  • The bond is a multi-currency mini-bond "credit-linked" to China and the bonds of six major companies: Coca-Cola, IBM, McDonald's, Standard Chartered Bank, Citigroup, and HSBC Holdings.
  • The bond is 5.5 years in duration and is backed by the financial health of the bond issuers, meaning bondholders will bear the risk of declining bond prices in the event of a default or "credit event".
  • There are two types of bonds being offered: a 5.5-year fixed-rate coupon and a 5.5-year fixed-rate coupon plus an additional return pegged to the performance of HSBC's share price.
  • The annual rate for the fixed-rate coupon is 4.8% for the Hong Kong dollar tranche and 5.2% for the first four years of the US dollar tranche.
  • The additional return rate for the bond linked to HSBC's share price is 20% of the growth in HSBC's share price during the period.
  • The minimum initial investment is US$5,000 or HK$40,000.
  • The subscriber period starts today and ends on September 2, with the product available at branches of several banks.

Statistics:

  • The bond is backed by the financial health of the bond issuers, with a maturity date of September 15, 2011.
  • The fixed-rate coupon rate for the Hong Kong dollar tranche is 4.8% per year for the first 4 years, increasing to 5.6% per year for the remaining 11/2 years.
  • The fixed-rate coupon rate for the US dollar tranche is 5.2% per year for the first 4 years, increasing to 6.1% per year for the remaining 11/2 years.
  • The additional return rate linked to HSBC's share price is 20% of the growth in HSBC's share price during the period.
  • The bond is available at branches of several banks, with a minimum initial investment of US$5,000 or HK$40,000.

Sources:

  • SHK (no date) - "New Offering: Multi-Currency Mini-Bond Linked to HSBC Shares"
  • Francis Wong, Head of SHK Structured Products Distribution (no date) - Interview with SHK

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