What are bonds?
Like a Pfandbrief or a bond, a bond is a fixed-interest security (bond). Bonds are also called bonds. They are suitable for investment over a longer period of time. As a rule, a bond is a fixed-interest loan. This is usually taken up by states or corporations via the stock exchanges. The total debt of a bond is divided into many partial debts. The total amount is divided into partial debentures of 100, 500, 1000, 5000 and 10,000 euros. Since bonds are evidenced by certificates, they are securities. Since the certificates are bearer instruments, you can only assert your claim against the debtors as the owner of these securities.
The term bond also refers to a contractual obligation between two parties. The debtor is the seller of the bond. The provider of the bond uses the bond to procure outside capital. You as an investor lend money to the issuer by acquiring the bond and are its creditor. The price at which you acquire the bond corresponds to the debt capital that the seller receives. As long as the loan is not fully repaid, the issuer must pay you interest. A valid interest rate is bindingly determined when a bond is issued. It is also already clear at this point after how many years repayment will begin and how much time will elapse before the loan amount is repaid in full. Fixed-interest bonds, such as bonds issued in Germany by the federal government, offer benefits for both sides.
Further issuers of bonds
Bonds are issued not only by large corporations and sovereigns but also by ship Pfandbrief banks, public-sector credit institutions and private mortgage banks. These Pfandbriefe are used to finance mortgage loans. Municipal bonds are loans issued by private mortgage banks and public mortgage credit institutions to various public corporations, municipalities, federal states and the federal government to refinance loans. Other bonds include bonds issued by the “public sector”. These bonds are postal and rail bonds, municipal, state and federal bonds.
Bond allocations
A bond can be classified according to various criteria. That’s what it is:
– taxation
– interest rate
– repayment
– term
– Currency of the bond
– Country of origin of the exhibitor
Country of origin of the issuer: Depending on the country of origin, a bond may be a foreign or domestic bond.
Currency of the bond: You can buy bonds both as currency bonds and as domestic bonds in euros.
Maturity: Bonds are offered to you as short-, medium- and long-term investments. The average term of bonds is currently between 8 and 15 years. In the past, bonds with 50 years or perpetual bonds were also traded on the stock exchanges.
Repayment: There are also various options for the repayment of bonds: you can choose between perpetual bonds and redemption bonds. A bond is redeemed either with a one-off payment at the end of the term or by payment in instalments.
Interest rate level: There are also differences in the interest rate level (nine percent, six and a half percent and others).
Interest rate variant: A bond can be a non-interest-bearing, variable-interest or fixed-interest security. act.
Taxation:Your investment in a bond can be taxed at tariff, tax-privileged or tax-free.
Bond currency: Bonds are available in euros and in foreign currencies.
Country of origin of the issuer: Depending on whether the issuer of the bonds is domiciled in Switzerland or abroad, a distinction is made between domestic and foreign bonds.