We offer your company a diverse range of investment solutions. As an investment, bonds provide the investor with a predetermined income and maturity period for the investment. Similarly, when you company is looking to expand its capital base through market-based financing, bonds are a good alternative to balance sheet financing.
Bonds are loans issued by banks, companies, states, municipalities and other organisations. The minimum subscription amount for the loan is bond-specific. The minimum subscription for new issuances is generally 100,000 euro. In the event of a company’s bankruptcy, bondholders are in a privileged position as compared to shareholders.
Fixed or variable interest rates?
Bonds are generally bullet loans and carry either fixed or variable interest rates. For fixed-rate loans, a fixed coupon interest rate is set at the moment of issuance, which is paid annually, biannually or quarterly.
The coupon interest rate for variable interest rate loans is generally bound to the three or six month Euribor rate. The yield on a bond is compared to the reference rate of interest, which is either a specific state loan interest rate or market swap rate. The difference in yield as compared to the state bonds or the market swap rates depends on the estimated credit risk related to the issuer and the loan period.
Bonds are book-entry securities. They are administered by the domestic security system maintained by Euroclear Finland Oy or the international Euroclear system.
Secondary market trading
Secondary market trading refers to trading that takes place after the issuance of a loan. Nearly all issued bonds are marketable, which means that they can be bought and sold during the loan period. Secondary market deals are always enacted at the current market price.
Contact your OP Group member bank and our experts will assist you to select the optimal financing and investment solution for your company for any situation.