Bonds
The debt instruments, commonly known as bonds, are securities through which the investor lends to the issuer for a specified period of time against a fixed income, called a coupon. At the maturity date of the security, the investor receives back the nominal value of the bonds he purchased.
Advantages of bond trading
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Pre-known yield to maturity
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Fixed income
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One of the lowest risk financial instruments
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You can sell your bonds in the secondary market before they mature
Types of bonds
- They are debt instruments issued by the government of a country as a means of borrowing money. Holders of government securities receive interest payments on fixed dates based on a predetermined coupon rate and a payment of the nominal value of the investment on the maturity date;
- Government bonds offer constant income through fixed interest payments for the entire investment holding period, a fixed nominal payment date and provide some degree of investment protection combined with predictable returns;
- Government bonds are guaranteed by the country and for this reason they are considered to be a very low risk investment. Therefore, these instruments bring lower returns compared to other debt instruments;
- Depending on the investment horizon, one can invest in instruments with different yields. Government securities are divided into three groups - short-term (maturity up to 1 year), medium-term (maturity between 1 and 5 years) and long-term (maturity over 5 years);
- Government securities are issued in different currencies – BGN, EUR, USD, etc.
Global bonds
- They are debt instruments issued by the governments of different countries for the purpose of trading in international markets. This is a way for the country to be financed from sources outside its own borders;
- There are many bonds issued in different currencies and with different maturities. They are registered with major international clearing institutions such as Clearstream and Euroclear, and trade settlement is administered by them.
Corporate bonds
- They represent debt instruments that are issued by companies. The companies can issue bonds to finance their projects;
- In Bulgaria, a large part of the corporate bonds are traded on the Bulgarian Stock Exchange, but there are also some that are traded over-the-counter. This type of bond trading offers relatively higher coupon rates, carrying a higher yield, which is at the expense of increased risk due to the nature of the issuers and the quality of collateral;
- In the event of bankruptcy, holders of these bonds are compensated before shareholders.
Gain stability in your portfolio by investing in bonds. These financial instruments often provide fixed income.
Trade via:
ELANA Global Trader
ELANA BG Trader
Bonds
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