Bonds

On this page, you can find out everything worth knowing about bonds. What are bonds, how can you invest in them and what benefits they can offer you as an investor.

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How does it work?

On Invesdor.com, investing in bond rounds is easy and fast.

Registration

If you are already a registered user, you start by logging in to your Invesdor.com account. If you do not have an account yet, you can easily create one here and register.

Investment

Once you have found and chosen a bond investment for you, you'll find all the necessary investment documents on the pitch page. You can subscribe to digital bonds immediately and easily.

Signing Agreement

After investing, you will receive an email confirmation and further information. When the issue closes, the subscribed *bonds will be stored in your Invesdor profile or delivered to your securities or book-entry account.

 

*In case the bond is listed on a stock exchange and has a so-called ISIN-number please check with your broker or housebank if a transfer to your security or book-entry account is possible.

Bonds in 3 steps

1. The company is looking for growth capital.

Many companies issue bonds in order to raise long-term debt capital. In return for the capital, the company pays bondholders a certain fixed percentage of interest on the bond sum. This interest rate for bond is called a coupon and is usually paid annually over the bond's term, similar to a savings account, for example.

2. Invest in a bond round: fixed interest or auction.

After reviewing the documentation, and if you decide the bond round is right for you, you can place your investment and potentially benefit from the development of the company. To do this, select your investment amount as usual. The bond's interest can be fixed before the beginning or may be or determined by auction.

In case of an auction you may select the interest rate you at least wish to receive for your investment; this will be the rate you are bidding for in the auction. At the end of the round the company will choose the interest rate which is providing the target amount. If this interest rate is higher than you bidded, you will also get the higher rate. If it is lower, you will not be allocated in this round.

3. Your coupon is paid to your bank account.

If your investment is successful, you become a bondholder. The company makes your interest payments to your bank account (usually once a year) during the bond's term. Once the bond's term ends, i.e. the bond matures, the company pays you back the original investment sum.

Bond FAQ

What are bonds?

Bonds are freely transferable securities. Bonds typically have longer maturities; the bonds offered on Invesdor usually have a maturity rate between 4 and 10 years. They receive a fixed interest rate, called a coupon, which is usually paid out once a year.

Bonds are primarily used by large companies as an instrument for long-term financing. Why only large companies? For a couple of reasons. First, issuing bonds is expensive because banks charge high fees for it. In addition, generally only large institutional investors, such as insurance companies and funds, are allowed to invest in bonds.

Invesdor's goal is to make bond investing available to private individuals and enable them to invest in attractive medium-sized companies that do not yet have access to the bond market. A bond is unsecured and usually has the same ranking as an unsecured loan. This means that interest and capital repayments are serviced before equity and mezzanine capital.

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How do you invest in bonds on Invesdor.com?

At Invesdor.com, you can easily choose your desired investment amount. You simply enter the amount you want to invest.

The minimum amount is usually €1,000. The maximum amount you can invest is set by law and varies from country to country. Invesdor sets this automatically for you.

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Can I sell my bonds?

Bonds are securities and therefore transferable. In most cases, this is done via a stock exchange. Bonds issued through Invesdor can be listed on a stock exchange or become listed after the issue. In the case a bond you wish to invest in is listed on a stock exchange (and has an ISIN code) please liaise with your broker or housebank if the bond can be book in your security or book-entry account. In most cases, however, a stock exchange listing is not planned.

Invesdor is working on a solution for investors to offer and sell their bonds via the platform. It should be stressed, however, that this plan is very much a work in progress.

For now, you can contact us or the issuer if necessary and deposit your interest in selling. We will bring both parties together if there is sufficient investor demand. Furthermore, you can always scout for a buyer yourself or offer the bond to the company for repurchase. If you sell your bond forward, make sure you inform the company and Invesdor of the sale. This is the only way to ensure that the rightful owner receives the bond's interest and capital.

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How are profits from my bonds taxed?

The taxation of investment profits depends on the location of both the issuer and the investor. Please note, however, that the above is only general tax information that cannot replace individual advice from a tax consultant.

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Is there a fixed interest rate for bonds like a subordinated loan?

You receive a fixed interest rate that is paid out to you annually. It could also be that you - if the company is a B2C business and provides this option and you decide to choose it - receive the interest value in the form of a company' vouchers (instead of cash).

Also, the term is usually between 4 and 10 years and you will receive the full amount back at the end of the period.

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