Topic What are Bonds? | K&L Rock 1
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Topic What are Bonds?

Published by: 11.01.2023 20:00:11

A bond is the second most popular security after shares. Let's take a quick look at what it actually means. 

 

Bonds are securities that, when sold, the issuer (issuer) agrees to repay the client (investor) their face value. In practice, this means that the investor is lending money to the company or institution (the issuer) and thus becomes their creditor. 

 

In the Czech Republic, bonds can be sold by various companies, institutions, municipalities or even the state. By selling bonds, a company obtains capital and commits to repay it to its creditors over a certain period of time. In practice, it is a loan. 

 

Do you wonder what's in it for the lenders? Interest. Interest is paid to creditors until the bond is repaid - usually annually, but also quarterly or monthly. And there are three types. Fixed interest, variable interest, which varies according to interbank rates, and finally zero interest. There, lenders are paid more than the amount they sold the bond for. 

 

Distribution of Bonds

By maturity:

Short-term (maturity up to 1 year)

Medium-term (1- 10 years)

Long-term (over 10 years)

Perpetual (issued for an indefinite period)

 

by type of issuer:

 

State bonds - the issuer is the state, which guarantees the proper repayment. Low risk but equally low return.

Municipal bonds - sometimes referred to as municipal bonds, the issuer is a city, town, or county. They guarantee repayment with their own assets 

Bank bonds - in this case the issuer is a banking institution. 

 

And we, K&L Rock, are the issuer of the bonds. The total volume of our programme is CZK 400 million. By investing in bonds of our real estate projects, you invest in specific properties and have no worries. Part of our issues mature in 2024 and part in 2026.

All materials and information on the K&L Rock website are drawn from publicly available sources and are for informational purposes only. Every care has been taken in their creation. The information published on K&L Rock's website is in no way intended to be legal, tax or investment advice, analysis or suggestions or offers to buy or sell investment instruments, the implementation of which may result in the loss of all invested assets. The investment recommendations so indicated are for informational purposes only and are not binding. In no event shall K&L Rock be liable for any damages that may arise in connection therewith. Therefore, only use companies licensed by the CNB or with a valid permit to operate in the Czech Republic for trading in investment instruments.

K&L Rock also declares that it is not liable for any direct or indirect damage resulting from trading on the capital markets in general, and posts in discussions expressing the views of readers may not be in line with the operator's position and therefore cannot be regarded as its views.

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