What are Eurobonds in simple words, by whom are they issued and what kind of income can they give

19.05.2020
Posted by: Ganesa

Eurobonds

Want to know what Eurobonds are? In simple words, this is a type of Eurobonds only voiced on slang. Speaking superficially, a company, a state represented by the Central Bank or the Ministry of Finance issues paper that an individual buys and thus gives a loan. For the issuer - an excellent opportunity to quickly find the right amount with a long period of deferral of payment, for the investor - to get the benefit.

All these securities are traded on the international market, and the average yield is from 3 to 11% per year, taking into account various factors. To obtain tangible income, financial analysts recommend starting with the tool with the amount of $ 3000, but if you don't have that kind of money, Eurobonds are still available for you.

Eurobonds, or Eurobonds - how you can earn on them

Eurobonds are considered as a way of investing taking into account profitability, and in such a difficult economic time, this is a way not just not to lose, but to increase investments. Eurobonds - a certain debt paper, which is issued by the state, a legal entity to attract quick funds from individuals.

Earn on Eurobonds

Eurobonds appeared in Italy in 1963. And since the country is European, the prefix “euro” has fixed itself.

Today, Eurobonds operate not only in the EU, but also around the world. It’s easy to make money on them: you buy a security, get coupon payments, and at the end of the issue term you get the starting amount invested in the purchase. European bonds are considered one of the most stable investment instruments and one of the proven ways, where to invest 100 000 rubles.

Types of Eurobonds

Eurobonds are represented by the following types:

  • Eurobonds;
  • euronotes.

But other classifications are also highlighted. Depending on the method of paying income, distinguish:

  1. with a fixed interest rate;
  2. zero coupon bonds.

By repayment method, the following are available:

  • with a purchase option;
  • with an option to sell;
  • with purchase and sale options;
  • those that must be presented ahead of schedule for sale;
  • with repayment fund;
  • without the right of early recall.

Why do they need the issuer and investor

The issuer issues securities in order to quickly raise funds and have a margin of time for loan repayment. In fact, this is such a loan from the population, but with more favorable conditions for states or companies in comparison with banks. For an investor, this is an opportunity to invest, diversify a portfolio, make a profit and save start-up capital. As a rule, coupon payments are made once a year.

This is interesting: more than 30% of Eurobods in the world are issued in dollars, the rest in euros, yens, pounds.

How Eurobonds Work

For those exploring the possibilities how to become a millionaireIt’s important to understand how these securities work. In fact, it is necessary to convert the ruble into the national currency that is needed for the purchase and get a valuable document on hand. Then, once a year (or more often), you receive an average coupon income payment of 7-11%, and at the end of the issue term, the amount for which you bought the asset. In the period 2015-2016, Eurobonds in euros made it possible not only not to lose savings, but also to make a profit when the ruble fell significantly in value.

How do Eurobonds work?

How much can you earn on Eurobonds

Let me remind you: you can earn income through payments by coupon or speculative trading: that is, sell the security to another person on time with a significant difference at the starting price. That’s how it works federal loan bonds, which, like Eurobonds, allows you to get more than profit on bank deposits. On average, per year, depending on the reliability rating, you can gain from 2-3% to 10-12% of the starting face value. Before you buy Eurobonds, you should look at the current list, which shows the maturity, price, lot size, profitability and make the right decision based on this.

How much is 1 eurobond

The minimum value of a security is $ 1000. It is worth considering the nuance of the fact that bonds are bought in lots of 100 or 200 securities, and immediately a quite substantial amount comes out. The threshold is very high, and in order to make the instrument more accessible for many, starting in 2015, the Moscow Exchange allowed to split lots. Cost indicates on exchanges as a percentage of face value. For example, if the figure is 106%, then 1060 dollars must be paid for one paper.

Can I buy Eurobonds on IIS

Yes, as with stocks, ETFs. Of course, that it is also possible to receive a tax deduction of 13% or up to 52 thousand rubles per year, observing important conditions. Of course, an account must be open for at least 3 years without withdrawing funds. The procedure is standard.

Where can I buy Eurobonds

Today I will tell you in detail how to buy Eurobonds for an individual and do it with maximum benefit. In fact, there are 3 ways to acquire these securities. In the case of working with the first and third offer, you must first sign a contract with a broker, or open an IIS. If you decide to dwell on the option of a mutual fund, then an agreement with the managing company is required. Always carefully study the commissions and their conditions, since from this the net profit from the announced is significantly different. A few words about each option.

Buy Eurobonds

Moscow Stock Exchange

Eurobonds are traded on the Moscow Exchange and are available for both qualified and unskilled investors. Starting October 14, 2014, corporate bond trading is available. There you can cooperate in this direction with TOP companies such as Lukoil and Gazprom. You can buy it yourself or through the trustee service of a broker.

As part of a mutual fund

This is a practical solution, since many Eurobonds of Russian companies are quite expensive. Several companies are included in the unit at once and this substantially dilutes the portfolio. Attracts and loyal value from 1 to 5 thousand rubles. A proven option for diversification, attracting a loyal start.

ETF

Investors who do not want to invest large amounts stop at such a decision. In these funds, one “share” costs about 1500 rubles, and it may immediately include shares from Gazprom, Lukoil, Alfa-Bank, Rosneft and other companies. A good solution in order to diversify the portfolio on small amounts.

TOP best brokers

In choosing a broker, it is worth paying attention to many factors: from work experience, reviews to what commissions you need to pay and how convenient it is to cooperate. VTB is often chosen because of different tariffs and quite real commissions. “Tinkoff” attracts with its remote established work, but for the customers of Sberbank one of the lowest costs on the market is offered.

On average, an investor needs to pay a broker from 0.0125% to 0.08% for a transaction on the Moscow Exchange.

Be sure to study the conditions, the maximum size of the account, are there any fundamental conditions for the number of transactions and their turnover. In the choice of Eurobonds, not only liquidity is important, but also profitability. I suggest looking at the bonds with the largest coupon and deciding which of the securities is best for you. I offer up-to-date data taking into account the information posted on banks ru. Here you can select options in rubles and dollars.

Large Eurobonds available for purchase at the Moscow Exchange

Name Annual return Price for 1 piece in $ maturity date
Gazprom-18-2037-Euro 4.15% 1419.60 16.08.2037
GTLK-001R-05-bob 4.12% 834.35 21.08.2024
Gazprom-05-2034-Euro 4.11% 1502.90 28.04.2034
VEB. RF-3-2025-Euro 3.48% 1163.50 22.11.2025
Gazpromneft -03-22-euro 2.94% 1041 19.09.2022

It is worthwhile to dwell on eternal bonds. This is a rather specific market tool and its peculiarity is that coupon payments are made regularly, but the cost will never be paid off. To some extent, this is similar to the blue chip stocks. For example, such a security from the Agricultural Bank offers an annual income of 14,8%. But they are available exclusively to qualified investors.

At the moment, such Eurobonds from Russian financial companies are presented on an unlimited basis, there are 28 of them in the list, and quotes cost from 100 rubles with a minimum yield of 5% per year. Eurobonds are full-fledged participants in the financial system of the country and the world, and what is the securities market can be found out in detail from material on www.iqmonitor.ru. As another source of income, I recommend profitable sites, many of which do not even require investments.

TOP brokers

Let me remind you: the more sources of passive income, the better. As a result, I note: Eurobonds of companies and states generate income above inflation, and this is a significant argument in choosing a tool for investments in rubles. In the case of working with foreign currency, it is important to consider the exchange fees and the possible risk of a collapse. Eurobond income is more tangible than deposits. The most profitable purchase decision is through the exchange, but it is also more expensive, but the mutual fund will bring not very large income, but it is available to almost everyone. It remains to wish to always stay afloat, find those Eurobonds that are suitable for the price and yield of the coupon, and receive regular profits from them. Choosing the right tool is available only with in-depth analysis of all parameters of a security.

See also:

Author Ganesa K.
A professional investor with 5 years of experience with various financial instruments, maintains his blog and advises depositors. Own effective methods and information support for investments.
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Add your comment
Comments (25) (Comments)
Kerador (03.06.2020 to 09: 35)
Well, if you can get an average of 10% per year, and the deposit is 2 times less, then it’s quite logical where to carry the money. Of course, on the Moscow Exchange you’ll buy it yourself for a joker, but mutual funds and ETFs are the most suitable for an ordinary investor with a normal wallet.
Ilya (01.06.2020 to 19: 03)
I didn’t catch up with something: that is, Eurobonds and Eurobonds are the same thing, just written in a simple and too vandalized language? Correctly?
Sogo (25.05.2020 to 11: 54)
Thank you for the article! I heard that the threshold for joining Eurobonds is pretty solid. And an ordinary ordinary investor will not pull such amounts. But fortunately there is an ETF)
Paul (20.05.2020 to 07: 27)
Great article! I consider myself an oak in banking broker affairs, but everything is clear to me ... slowly getting used to your world ...
Vladimir Kholodkov (20.05.2020 to 11: 51)
pavel, Sooner or later, everything in this matter becomes interesting. Welcome to the investment.
AlexFanat (20.05.2020 to 14: 01)
Pavel, the world of investment is a kind of alternative for extra income, because in the real world people limit themselves in almost everything.
Aleksfx (20.05.2020 to 20: 07)
Pavel, here everything is like this at the beginning) the main thing is not to lower your hands and study and ask if you have questions
Vladimir Kholodkov (23.05.2020 to 09: 26)
Aleksfx, That's for sure, many people search the Internet for a decent income, and it’s not always successful. Now the best blog can be found in one place.
Aleksfx (24.05.2020 to 19: 33)
Vladimir Kholodkov, as they say, whoever seeks will find)) I found something here))
Sogo (25.05.2020 to 11: 58)
Vladimir Kholodkov, yes, a lot of usefulness appears on the blog. And about different tools for earning articles enough)
Aleksfx (29.05.2020 to 02: 56)
Sogo, It seems to me that the blog already has a lot of cool information and you can collect a huge portfolio) the main thing is that there are enough funds)
Sogo (25.05.2020 to 11: 55)
Pavel, the blog does write useful articles in a very understandable way. So we study everything and develop)
Vladimir Kholodkov (20.05.2020 to 03: 09)
I heard about bonds, but somehow I was not interested in it. Now an article has appeared on the blog, opportunities are growing, investors are showing new conditions. I think it will be interesting.
AlexFanat (20.05.2020 to 13: 59)
Vladimir Kholodkov, and each such article maximally motivates for further growth in various directions.
Aleksfx (20.05.2020 to 20: 06)
Vladimir Kholodkov, we need to expand our horizons in this direction)) and just here it is an opportunity))
Sogo (25.05.2020 to 11: 56)
Aleksfx, We will develop and we will be able to notice those very opportunities)
Aleksfx (29.05.2020 to 02: 57)
Sogo, I did not stop) I always develop and learn something new for myself)
Aleksfx (19.05.2020 to 19: 28)
Thanks for the article) it is useful to actually read new information for yourself))
AlexFanat (19.05.2020 to 14: 35)
The story about Eurobonds is right in the subject, I read it and realized for myself some truths in this direction.
Vladimir Kholodkov (20.05.2020 to 14: 33)
AlexFanat; It would not hurt to get into such a portfolio. We only need to fulfill the conditions, but we are dealing with them.
Aleksfx (22.05.2020 to 05: 57)
Vladimir Kholodkov, in any business where there is investment there are conditions) therefore, you always need to understand
Sogo (25.05.2020 to 11: 57)
Vladimir Kholodkov, the threshold for joining bonds is not small, since there are ETFs on them
Grinja (19.05.2020 to 14: 26)
Of course, I do not consider myself stupid and heard such a name. And thanks to the article I learned more about him. In particular about species, I would never have thought that there are so many of them
Vladimir Kholodkov (20.05.2020 to 14: 30)
Grinya, Also noticed with the views, he was at a loss and at once so much.
Aleksfx (20.05.2020 to 20: 05)
Grinya, you can’t absolutely know everything)) and who assures him is even more stupid)) so this is normal everything))
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