Bond Financing


 

 

*Terms & Conditions Apply

What is Bond Financing?

With Bond Financing, you may use assets such as cash, shares, Exchange Traded Funds (ETFs), unit trusts, or bonds as collateral to purchase bonds with financing. This allows you to free up cash and optimize your portfolio to achieve your financial goals earlier.

How Does Bond Financing Work?

Using your existing portfolio as collateral, you may purchase bonds with financing to increase your portfolio yield without any additional cash outlay.

 

Illustration:

Existing Grade A portfolio receiving 4% coupon p.a. $250,000
Annual coupons received $10,000
Available loan amount if purchase Grade A bonds $625.000
   
Purchase 2 more bonds for $500,000 @ 4% coupon p.a. on financing  
   
New total portfolio receiving 4% coupon p.a. $750,000
Annual coupons received $30,000
Less financing charges of 2.68% on $500,000 loan $13,400
Net coupons received $16,600


By purchasing bonds with higher coupon rates than our bond financing rate, you will be able to profit from the difference in rates and increase your bond portfolio yield. This is called Positive Gearing, which takes advantage of our low bond financing rates.

What Are Our Financing Rates?

Our Bond financing rates are as follows:

Which Bonds Are Available For Financing?

We offer over 100 bonds to finance. Find out if a bond is available for financing by using our Margin Finder Tool.

How Much Can I Borrow?

The amount of loan you are able to get depends on several factors such as the grading of your collateral, the grading of securities you intend to purchase, as well as your approved loan amount.

To find out how much you can borrow based on your collateral and purchases, please view the table below:

Step 1: Choose your collateral type

Step 2: Choose your grade of purchase.

 

How Do I Start Using Bond Financing?

Step 1: Open A Margin Account

To open a Margin Account, visit any of our Phillip Investor Centres in Singapore here with your NRIC, or apply for one online here.

The account takes about 1 week to open upon applying.

Step 2: Deposit Your Collateral

After your Margin Account has been opened, you may transfer cash or existing securities into it to use as collateral.

Here are the ways to do so:

1. To transfer cash into your Margin Account, you may

Do an Electronic Payment for Shares or Internet Banking payment from your respective bank websites or;

Drop a cheque at any of our Phillip Investor Centres here or;

Make cash payment at our Raffles City Branch:

250 North Bridge Road,

#06-00, Raffles City Tower

Singapore 179101

2. To transfer securities from other Phillip Securities Trading Accounts into your Margin Account:

kindly contact your FA/TR for assistance. Don’t have their contact? Kindly give our customer hotline a call at (+65) 6531 1555 to inquire.

3. To transfer in securities from other counter-parties into your Margin Account:

kindly contact your FA/TR for assistance.

4. To transfer in your securities from CDP into your Margin Account:

Visit any of our Phillip Investor Centres here with your NRIC or;

Contact your FA/TR for assistance

Please note CDP transfer charges are $10.70 per counter. which will be deducted from your trading account.

Step 3: Start Purchasing

After your collateral or funds have been transferred into your Margin Account, you may view your available loan amounts by logging in to our POEMS 2.0 online trading platform and start purchasing bonds with financing.

Financing may be available for selected new bond issues. Kindly contact your FA/TR or our Bond Desk at (+65) 6212 1818 to find out more.

Learn more about trading bonds with us by viewing the following articles:

How To Trade Bonds

What Are The Risks Of Bond Financing?

Leverage Risk

As Bond Financing involves the use of leverage, your portfolio may experience higher volatility due to magnified gains and losses.

Margin Calls

When your collateral value falls below a required margin ratio, you may be subjected to a margin call. This means you may potentially lose more than your initial investment in the event of adverse price declines or in cases of bond defaults.

Learn more about our margin ratios and margin calls in our Information Sheet.

Bottom Line

Bond Financing is a powerful tool able to optimize your portfolio and increase its yield, however investors should be aware of the risks that come with financing.

Don’t have a trading account yet? Open one online here today!

Got more questions about Bond Financing? Get in touch now at bonds@phillip.com.sg or +65 6212 1818.

 

Enquiry


Have an enquiry? Get in touch with us at (+65) 6212 1818 or message us below!
Not yet an account holder? Open an account online here