Investment in Bonds
Definition of bonds
Bonds are a form of fixed-income investment, like bank savings and debentures. More specifically, they enable the bondholder to receive fixed payments (coupons) on predetermined dates (for instance, on a quarterly basis), while the issuer must pay the bond’s nominative value upon its expiry.
Bonds are divided into two categories, depending on the issuer: government bonds and corporate bonds. By issuing bonds, governments and companies aim to increase their liquidity through the investing public, in order to fund their activity. Until now, only institutional investors had access to the bond market.
Whom is this is suitable for?
- Conservative investors who are not happy with the low return from their bank savings
- Pensioners who wish to earn a passive income every year
- Any investor wishing to diversify his or her portfolio
The benefits of the bond market
- Low risk: the only material risk taken by the bondholder is the possibility of a reduction (haircut) of the bond’s nominative value (e.g. the Greek government bonds in 2013) or an extension of the payment periods (e.g. Dubai government bonds from 2010 to 2015).
- Moderate returns: the return on investment offered by bonds has been referred to as the “golden mean” between the low returns of bank savings and the high-risk returns of stocks.
- Predictability: unlike stocks, bonds offer specific returns on predetermined dates, making it easier for investors to plan for the future.
- Government bonds and bonds issued by blue-chip companies have a very high level of liquidity. This means that one can always find eager buyers for these bonds at market prices.
- Portfolio diversification: bonds are a low-risk investment, recommended for any portfolio.
- Hedging currency risk: investors are able to purchase bonds in foreign currency (e.g. US dollars).
The services we provide
- Offering and selling bonds from the primary market. Our department entrusted with the sale of bonds is registered with the Cyprus Securities and Exchange Commission (CySEC).
- Consultancy services. We have implemented the PMP procedure established by CFA Institute to identify bonds that match each investor’s particular needs and situation.
- Fundamental and technical analysis.
Should you have any queries, don’t hesitate to contact us.