^FAQ Frequently Asked Questions (FAQ)

Fractional bonds are investment products that allow you to gain economic exposure to an underlying reference bond in a minimum denomination that is lower than what is typically required to access traditional bond markets. Fractional bond investments provide investors with proportional economic exposure to the underlying reference bonds and do not constitute offers or sales of securities.

When you invest in a fractional bond, you are taking proportional economic exposure to a reference bond. You receive a proportionate share of the replicated interest payments and principal repayments, based on the size of your investment.

No. When you invest in a fractional bond, you are purchasing a product that replicates the proportional economic returns of the underlying reference bond, but you do not own the reference bond or any part of it. The reference bond may or may not be held by ADCB, and your right to receive interest and principal payments is based on the terms of the fractional bond investment.

Yes. Fractional bond investments are not principal-protected and carry various risks, including but not limited to:

• Liquidity Risk – Limited marketability may affect the ability to sell positions quickly or at favorable prices.
• Credit Risk – The risk of default by the issuer of the underlying bond or risk of default of ADCB.
• Underlying reference bond risks – depending on the business or jurisdiction of the underlying reference bond, investors in fractional bonds will be exposed to a variety of risks that impact the issuer of the reference bond. Investors in fractional bonds should be aware of such risks and these will be set out in the issuance documentation of the underlying reference bond.
• Limited Rights Risk – While the investor receives economic exposure mirroring the reference bond on a fractional basis, they will not hold any legal title, voting rights, or beneficial interest in the reference bond.
• Interest Rate Risk – Changes in interest rates may affect the value of the investment.
• Market Risk – Broader market movements may impact the value of the underlying instruments.
• Currency Risk – Exposure to foreign exchange fluctuations if the bond is denominated in a currency other than the investor’s base currency.
• Operational Risk – Risks arising from system failures, human error, or external events.
• Regulatory and Legal Risk – Changes in laws or regulations may impact the investment or its returns.

To understand more please refer to ADCB's Wealth Terms and Conditions available on our website.

You will receive interest and principal payments that mirror the reference bond’s cash flows in proportion to your fractional holding, provided and to the extent the underlying reference bond issuer makes these payments.

No. Fractional bondholders do not have voting rights and cannot participate in any voluntary corporate actions, such as amendments or restructurings, relating to the underlying reference bond.

Fractional bonds can only be purchased and sold through ADCB’s investment platform. Selling before maturity may be limited or unavailable, depending on market liquidity.

1. If you are holding a Fractional Bond Investment and the underlying Reference Bond defaults, the Bank will notify you as soon as reasonably practicable.
2. An event of default in respect of an underlying Reference Bond of a Fractional Bond Investment may lead to a loss of interest and/or principal in respect of the Fractional Bond Investment.
3. Any event of default in respect of an underlying Reference Bond may lead to a bondholder meeting of the relevant Reference Bond. As a holder of a Fractional Bond Investment, you will not have the right to attend or vote in any such meetings called in respect of the underlying Reference Bond. The Bank will use its best efforts to keep you informed of any restructurings in respect of Reference Bonds that are relevant to your portfolio of Fractional Bond Investments, however the Bank cannot give any assurance as to the outcome of any restructurings.
4. The Bank will use its best efforts to offer you a price to sell any defaulted Fractional Bond Investments, however a default may lead to the loss of some or all of your investment in the relevant defaulted Fractional Bond Investments.

The minimum notional amount is set at US$ 25,000 for a fractional bond investment.

Prices are based on live bond market data, including accrued interest and market demand. You will see the quoted clean price.

Yes, but subject to market conditions, liquidity and provided the underlying bond has not defaulted. Fractional bonds may only be traded on the Bank’s platform and liquidity is not guaranteed.

You will receive your share of the final principal repayment, together with any interest, and the fractional bond will be closed out from your portfolio.

Yes. The schedule of Fees applicable to fractional bonds, which may cover the platform, recurring investment fees and execution related costs. All fees will be disclosed transparently before you invest. Please review the Schedule of Fees for Wealth Services before investing.

Monthly holding statements and notification reports on buy and sell transactions will be provided. You can also contact your relationship manager for further assistance.

The Bank will maintain a list of eligible bonds, and will execute client’s fractional trade order(s) referencing those eligible bonds only. ADCB’s role is limited to providing access to these products through its investment platform. ADCB does not act as issuer or guarantor of the underlying bonds or the fractional bonds. You do not have recourse to ADCB for any payments or obligations to the reference underlying bond or the fractional bonds. All payments to investors depend on the performance and payments by the underlying bond issuer.

No. ADCB has not done any due diligence on the underlying reference bonds.

No. ADCB is not recommending the investment in any fractional bonds. Potential investors should assess the risks of investment independently.

For more details, contact your Relationship Manager or SMS 'FRBOND' to 2626 or please visit www.adcb.com/wealth.