Product Know-how

Structured Bond - Interest Plus Risk

Purchasing a structured bond is a good idea if...

... You want to earn more interest with greater risk.

Exposure to structured bonds is particularly interesting from a long-term point of view. In contrast to normal bonds, they generally offer a higher rate of interest. In exchange, the investor must assume a higher risk of loss in case of pending deficit in payment by the issuer.

Structured bonds are interest-bearing securities characterised by individual additional conditions. These conditions influence the repayment or interest payment of the bond. Before purchasing a structured bond, the buyer must inform himself of these conditions as much as possible. Since structured bonds are often rated somewhat more poorly than normal bonds from the same issuer by ratings agencies, they offer a higher rate of interest, on average. This allows the investor to enjoy a better rate of return. Only in the case of the issuer’s insolvency do serious losses threaten - in extreme cases even a total loss.
Structured bonds are growing in importance in the world of bonds. The name “structured bond” does not, however, describe a concretely defined bond, but rather a general category. There are many ways to configure structured bonds. These options directly influence the repayment or interest payment of the bond. Before buying a structured bond, the investor should research its specific characteristics in detail. An example of a structured bond is a stepped coupon bond.