With quotes:

$new = htmlspecialchars("<a href='test'>Test</a>", ENT_QUOTES);
echo $new; // &lt;a href=&#039;test&#039;&gt;Test&lt;/a&gt;

Without quotes:

$new = htmlspecialchars("<a href='test'>Test</a>");
echo $new; // &lt;a href='test'&gt;Test&lt;/a&gt;

The second parameter possible values:

ENT_COMPAT

- Will convert double-quotes and leave single-quotes alone.

ENT_QUOTES

- Will convert both double and single quotes.

ENT_NOQUOTES

- Will leave both double and single quotes unconverted. The default is ENT_COMPAT