Senior Bonds
Senior bonds are global notes with a nominal value and determined interest yield (coupon). They are intended for clients who want to get the determined interest yield for a predetermined period. The payout of the interest yield and nominal value is guaranteed by their issuer.
The purchase of a bond will enable you to save money for a specific period, and if you keep the bonds to their maturity date, also for a predetermined yield. The payout of the bond interest yield and nominal value is guaranteed by their issuer.
Your advantages
- Thanks to the fixed maturity date, other investments can be planned.
- The current yield to maturity together with the bond selling price is published daily in the bond price list.
- The bonds can be purchased at ČS branches.
You should know
- The bond selling and purchase price changes every day due to yield changes on the bond market. If an investor keeps bonds to the maturity date, price fluctuations will not affect its yield at maturity.
- The price for the procured sale of senior bonds, structured bonds and structured notes, subordinated and other bonds is expressed in percentages of the trade volume. You can find details in the Price List.
- A yield to maturity is the yield of a bond held to its maturity date. It is based on the current bond selling price and future interest yields. The yield to maturity is used to compare the yields of bonds with a different period to maturity and coupons of varying amounts.
- In the period between the payments of the interest yield (coupon), the aliquot interest yield (AIY) is determined as part of the interest yield, to which the bondholder is entitled for the period from the issue date or from the date of the final coupon payment calculated up to the trade settlement date. The AIY is automatically added to the bond price and can be positive and negative.
- You can be find issue additions of bonds distributed by Česká spořitelna on the investment portal www.investicnicentrum.cz.
What else should you know about Senior Bonds
The interest yield is paid out usually once (or twice) a year on a predetermined date. The bond nominal value is paid out together with the final coupon on the maturity date.
The price for which bonds are purchased is important for the real investment yield. At the time when the current yields on the bond market are lower than the bond interest yield, bonds are sold for a price higher than their nominal value and vice versa. Therefore, the real yield to maturity calculated on the basis of the current selling price and yields paid out in future could be lower or higher than the bond interest yield.
Income from the holding and selling of foreign bonds and structured notes (ISIN does not start with CZ...) is not subject to final withholding tax, but is subject to individual taxation, and if not exempt from tax, the taxpayer is obliged to declare this income in the relevant section of a tax return.
… increasing interest rates?
An increase in interest rates on the market results in a fall in prices of already issued bonds with a fixed coupon. If current interest rates are higher than those at the time that the bond was issued, under otherwise identical terms and conditions the bond is sold for a price lower than its nominal value
… stable interest rates?
Under otherwise identical terms and conditions, stable interest rates do not affect the bond price.
… falling interest rates?
A fall in interest rates on the market results in an increase in prices of already issued bonds with a fixed coupon. If current interest rates are lower than those at the time that the bond was issued, under otherwise identical terms and conditions the bond is sold for a price higher than its nominal value.
Bonds are offered in the form of a global note - Česká spořitelna purchases and sells bonds by transfer of notes in the register of shareholders. The transfer will be settled within 2 business days after ordering a trade. If the investor pays the price of the purchased bond, a share in a global note is credited to the investor’s asset account within 2 business days after ordering the purchase.
Taxation of investment yields
Terms of purchase and sale of bonds and structured notes
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