Treasury Bill/Bond Investment External Rupee Account – Deshabhimani (TIERA-D)

Earn Higher Returns from Government Securities

Invest in Sri Lanka government securities through a “Treasury Bill/Bond Investment External Rupee Account – Deshabhimani” (TIERA-D) with HSBC and earn potentially higher returns on your investments.

Benefits

Potentially earn higher returns on your investment by investing in government securities
You are not subject to further taxation, since a withholding tax of 10 percent of interest is charged at source
No exchange control regulations to repatriate interest and maturity proceeds in any designated currency to your overseas account
Ability to book forward exchange contracts to mitigate currency risks
Ability to enter into short term repurchase (REPO) agreements
Ability to track your account by using Personal Internet Banking from HSBC
Eligibility for duel citizenship

Features

Sri Lankan Diaspora and migrant workforce now have the ability to invest in Treasury Bills and Treasury Bonds and benefit from high interest yields
Remittances to the TIERA-D would automatically be converted at the prevailing exchange rate to Sri Lankan Rupees (local currency) and can be invested in government securities of your choice.
Upon maturity, interest and maturity proceeds can be repatriated in any designated currency to the account specified by you.
Credits to TIERA-D

Debits to TIERA-D

* Only for existing HSBC account holders

Requirements

Eligibility

Sri Lankans who have made their permanent residence overseas (non-residents)
Citizens of Sri Lanka who have taken up overseas employment / set up business in abroad
Citizens of Sri Lanka with dual citizenship in Sri Lanka and in another country
Sri Lankan professionals living in Sri Lanka or abroad who earn income in foreign exchange
Banks acting in fiduciary capacity on behalf of the above categories

Minimum Investment

A minimum investment of US$ 10,000 or equivalent in other designated foreign currencies.

Investment Tenures

Treasury Bills - 3 Months (91 Days)
6 Months (182 Days)
12 Months (364 Days)

Treasury Bonds - 2, 3, 4, 5, 6, and 10 Years

Instructions

Transactions will be carried out on “Execution-Only” basis where no investment advice, suggestions or other guidance related to the investment is provided by HSBC.

Invest in a TIERA - Deshabhimani

Opening a TIERA-D Account

Risk Associated with this investment include:

Principal risk: At maturity, customers may receive the Face Value of the Bill/Bond. If the Bill/Bond is prematurely liquidated, there is a possibility that the customer will suffer a loss on the principal sum when compared with the initial purchase price of the Bill/Bond. Furthermore, currency rates fluctuate; as such there is no guarantee that the investment will produce returns in excess of the local currency depreciation or in excess of those available on other investments or savings products linked to current market interest rates.

Early termination by customer: Should the Bill/Bond be liquidated prematurely by the customer, the bank will deduct any early liquidation costs from the principal payable to the customer. It is therefore possible that customers will not receive 100% of the initially invested amount back. These termination costs may be substantial and hence, it is important that customers are prepared to hold this investment until maturity or alternatively be prepared to incur these costs in the event of early liquidation.

Market risk: Many factors can affect the level of currency exchange rates, including the political and economic environment, business conditions, customer sentiments and confidence. All of these factors can refer to local or global markets. Treasury Bonds and Bills can be volatile instruments and may be subject to considerable fluctuations in value and other risk inherent in investing government securities

Interest Rate Risk: Investors are exposed to the movement of interest rates whenever the Bills/Bonds are sold prior to maturity. Movements in interest rate will have an impact on the value of the Bond if sold prior to maturity. The longer the tenor of the Bond, the more sensitive the Bond will be to interest rate changes. The lower the coupon rate on a bond, the more sensitive is its price to a given change in interest rate.

Foreign exchange risk: An account holder will be subject to fluctuations in exchange rates, which could affect the account holder's return either negatively or positively upon conversion into original currency of the account.

Re-investment risk: On Bonds, the Yield to Maturity (YTM) is computed with the assumption that coupons [interim interest payments] can be reinvested at the same rate as the quoted YTM. However, the customer needs to consider that he/she will not be able to invest the bond coupons at the same YTM rate quoted at purchase. This might result in the total investment yield being less than the original YTM rate.

Credit Risk: The deposit may involve credit risks of the deposit taker. In the case of a default by the issuer of the security - in the case of Treasury Bills and Treasury Bonds it is the Government of Sri Lanka - the customer may receive back substantially less than what is invested and many even receive nothing.

Sovereign Risk: Repayment of the Face Value/coupon Interest/ interest may be subject to sovereign risk. This includes the potential default by the government or the occurrence of political or economic events resulting in governmental action such as declaration of a moratorium on debt repayment or negating repayment obligations of the sovereign issuer. If any such event were to occur, customers may lose up to all of their initial investment in the Bill/Bond.

Tax Risk: Although these investments are exempted from the government of Sri Lanka taxes, the customer could be liable to tax from the country of residence/origin. These taxes imposed by the country of origin due to regulatory requirements/changes/tax laws will need to be borne by the investors/customers.

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