Topic What are Bonds?

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.