Citizens who have money savings want to increase them and protect them from inflation. One of the most reliable investment tools is the purchase of securities. Managing this type of asset on your own is quite difficult and expensive. It is much easier to contact Alfa Bank and buy bonds there. In this case, all necessary actions are performed for the investor by a management company, whose employees are true professionals in their field. One of the most reliable and significant players in this segment is, which has been successfully operating for 25 years.
Which edition is better and how to choose it
In the case of Alfa-Bank, it is interesting to talk not about ordinary issues of corporate bonds, but about structured securities issued by the issuer.
Among these, I will highlight “Alfa-Bank bonds series BO-19” or, as they are also called, Alfa IQ. These bonds have a fairly low coupon rate (5% per annum, lower than federal loan bonds), but they can provide investors with additional yield, which can reach approximately 5-10%.
As for independently choosing bonds among other issues, you need to pay attention to the following characteristics:
- financial stability and current issuer ratings;
- liquidity of bonds (exchange and over-the-counter);
- type of instrument (coupon/discount/mixed);
- coupon size and depreciation;
- regularity of payments;
- profitability (ratio of payments to current market quotes);
- add. characteristics (offers, conversion, etc.).
How to purchase bonds at Alfa-Bank
All categories of clients can purchase Alfa-Bank securities by contacting professional brokers who have free access to the Moscow Stock Exchange. Direct interaction with a financial institution is allowed. You can visit any office and perform the operation. The convenience of the second method is due to the fact that potential investors do not need to delve into all the intricacies of working with bonds.
The interested person needs to give his general passport to the employees of the selected department. Based on personal information, an individual brokerage account is opened, to which funds are subsequently transferred. If necessary, you can manage the generated portfolio independently in your personal account. Sales of securities occur through Alfa-Bank’s internal channels. Clients do not need to spend a lot of time to earn sufficient income.
Share market services for issuers of securities
What is Alfa IQ
For example: Alfa Bank's structural smart bonds, listed under the BO-19 series, are linked to the NXSRUFA index (Natixis NXS Ultimate Fund Allocator ER Index). This index is a portfolio of shares of a group of investment funds and is calculated in euros, but the bond itself is in rubles.
The bonds are listed on the open market and are available for purchase by any individual.
But we must take into account: although the instruments were issued for 15 years, 3 years after the start of circulation of the bonds Alfa-Bank can buy them back or change the calculation base, this must be kept in mind.
Bank services in organizing bond loans
This financial institution is one of the leaders in the field of organizing and underwriting bond loans for companies. The bank has a sufficient amount of its own funds for investment and an extensive customer base. This makes it possible to successfully place issued securities and provide them with high liquidity on the secondary market.
In 2021, Alfa-Bank offers the following list of services in organizing bond loans:
- collection and processing of information for long-term entry into the loan market, taking into account the specifics of the business;
- choosing the optimal structure;
- qualified assistance in preparing papers for registration of a bond issue;
- performing all tasks of the paying agent for issuing securities;
- performing a cyclical buyback;
- providing the client with analytical support;
- maintaining two-way quotes for issued bonds on the secondary market.
Using its influence and international connections, the institution helps its corporate markets enter the debt markets of Western countries.
With such support, the planned project will definitely be successful. In 2021, the financial institution became the organizer of bond issues for the following companies: VSK Insurance House, Russian Post, Er-Telecom, ". On the bank's website you can see completed projects over the past years.
Profitability and is it profitable to invest?
The guaranteed coupon here is 5% per annum and is paid every 182 days.
Additional income on such bonds is calculated as follows:
110% * index growth
It is paid based on the results of 3 years from the beginning of circulation of securities. Since the bond was issued on 05/12/2017, this means that the reporting date for establishing the exact yield will be 04/29/2020. The date when additional income on Alfa-Bank bonds will be paid is set for May 8, 2021.
Therefore, it is interesting to look at the current chart and the index's performance at the moment.
Is it profitable to invest in such or similar structured bonds?
Obviously, there are good options that are superior to ordinary bonds and provide holders with greater cash flow over a certain period.
If we focus on current prices, then Alfa-Bank BO-19 may now have a yield of about 8.7%, taking into account the additional payment, but this figure is still a variable value.
Which is more profitable: bank deposit or investment in bonds?
Deposits and bonds help to receive a stable income from financial investments. Although there are similarities, there are some differences. If a client wants to invest a small amount of funds, then classic deposits would be the ideal option for him. All deposits up to 1,400,000 rubles are protected by the state. Such guarantees are not provided for bonds of commercial banks. The interested party can only count on the fulfillment of the issuer's obligations to pay dividends within the stated period.
Investments in bonds are considered a more profitable option. This is primarily due to the duration of the available programs. Clients can purchase long-term fixed income securities. During the period of validity of the agreement, a certain amount will be paid, regardless of the current state of the economy of the Russian Federation.
Reviews
Caution never hurts. Throwing headlong into the financial sea is not the best strategy.
Useful tips for future investors
How to choose a broker? To effectively select a broker, it is recommended to be guided by the following criteria: reliability, ease of cooperation and the amount of commission fees. Assessment of satisfaction of requirements is carried out strictly on an individual basis. As for the commission, it can be calculated in specific figures. Money will be safe only if you choose a reliable company. Certain conditions must be met:
- availability of legal registration on the territory of the Russian Federation and a license to operate in the financial sector;
- impressive net worth of the broker;
- high reputation in the securities market;
- good reviews from client groups.
When is the best time to buy securities?
Professionals note the relationship between changes in bond prices and the company’s net profit. The trend does not always appear in a timely manner, so novice brokers should not worry too much about profitability. In some situations, prices begin to rise immediately after profits increase. At first, the price may decrease, which allows potential investors to purchase securities at an affordable price.
If the broker manages to find a good offer from a successful company whose shares are in the process of steady growth, then it is not recommended to purchase them immediately. It is advisable to wait a little time before adjusting prices. As part of proper portfolio management, investors should be able to:
- distinguish unprofitable companies from successful ones;
- calculate the current value of securities;
- to divert attention from obviously unprofitable offers, even if the current circumstances indicate the possibility of making the most profitable deal;
- determine the moment to buy bonds of successful companies - it is important to wait for the maximum reduction in value;
- maintain clarity of mind in the face of a negative information background formed by the calculations of stock analysts;
- eliminate the desire to quickly sell profitable bonds - with this approach, profits will not grow under any circumstances;
- sell securities when new profitable investment channels appear on the stock exchange;
- clean your portfolio when your performance drops.
Redemption of perpetual bonds by offer
Despite the fact that formally perpetual bonds do not have a final maturity, many issuers offer a put option on the call option date. Don’t be afraid of scary and incomprehensible words, I’ll explain everything now.
The issuer says, “Hey guy! I issued a perpetual bond and will basically pay it forever. But in 10 years I can buy it from you at par. If you want, of course.” There can be many reasons for selling a perpetual bond:
- Interest rates have changed and returns have become unprofitable;
- I urgently needed money, but there was zero liquidity on the exchange;
- More attractive investment options have appeared.
As a rule, the offer lasts 1-2 months. During this period, you can present the bond for redemption at par. This is done through a broker. Please note that some brokers charge an additional commission for this.
The second option on how to get out of a perpetual bond is to simply stupidly sell it on the stock exchange. But if liquidity is low, then it is unlikely to be sold at a good price.
Bond share price plus
The fund has become very attractive. The value of assets quickly surpassed the billion dollar mark. The price of a share is influenced by the types of profitability and cash flow.
- The coupon increase depends on the annual profit and the par value of the security.
- When calculating current yield, the net (face) value is taken into account along with the coupon income. Average parameters vary within 12%.
Expert opinion
Alexander Ivanovich
Financial expert
The mutual fund focuses on government and private securities from well-known Russian companies. The calculation established for April the cost of one share - 3936 rubles.
Recently
The presented table helps to better study the dynamics. Three months in two years are taken into account.
How to open a special account in Sberbank?
| Profit | October | november | December |
| 2017 | 3754 | 3773 | 3804 |
| January | February | March | |
| 2019 | 3878 | 3938 | 3959 |
Changes over the year
The difficult market situation did not prevent us from achieving stable profits. Over the past year, the rate remained at 12.51%.
Profit for 3 years
The three-year investment turned out to be the most profitable. A bet of 39.36 gives 39 thousand income if the client deposited 100,000 rubles.
Is it worth buying perpetual bonds?
In general, perpetual bonds are a very narrow niche. There are few people willing to buy and sell bonds - sometimes literally 5-10 transactions are made per week with one instrument. And sometimes – none at all. So, even if you can buy such a bond, it is not a fact that you will be able to quickly sell it at a favorable price. Low liquidity is one of the disadvantages of this instrument.
Perpetual bonds are more interesting for large companies, states, hedge funds or investors with significant capital who are willing to take risks (remember, I wrote that most perpetual bonds are subords). Also, the main buyers are qualified investors. Often, perpetual bonds are sold by subscription at a discount among those interested, and only then are they put on free sale on the stock exchange.
In short, in my opinion, it is worth buying perpetual bonds only if you understand what you are doing. For an unprepared investor, the instrument may come with its own pitfalls, which he may not be prepared to face - low liquidity, a sharp change in profitability, forced redemption. Well, the high cost of most bonds simply closes the possibility of purchasing them for investors with small capital. So in any case, think for yourself whether you need perpetual bonds. Good luck, and may the money be with you!
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Completed projects
The client is invited to invest money in mutual investment funds (UIF). Trust management is entrusted to the company, which has been operating on the market since 1992.
The accumulated experience significantly reduces risks. The company's specialists know how to analyze and trust the markets that bring the greatest profit. We are working with several mutual funds that have become in demand.
- Bonds Plus will allow you to see the dynamics of income this year. Comparison of indicators over 3 years convinces of effective management. Bond securities in the fund amount to 97%, the remaining 3 are allocated to creditors. You will need to invest 1000 rubles; if intermediaries are involved, the amount will increase to 5 thousand.
- A clear schedule is available in the Energy fund. The bulk of the shares belong to large companies (84%), the remaining shares bring a decent profit. The minimum investment period is one year.
- Mutual Fund "Metallurgy" is inextricably linked with this industry. The shares are allocated 9 percent at a cost of 686 rubles.
The market situation dictates the choice of a conservative strategy. Alfa Capital Bonds Plus continues to operate successfully.
New rules for issuing loans: what has changed for banks?
Meanwhile, since the beginning of October, new rules for issuing loans , with the help of which the regulator wants to limit the ability of banks to build up retail portfolios.
The main innovation for banks that issue consumer loans in the Russian Federation is the introduction of the concept of maximum debt load (MLL) of the client. It is calculated as the ratio of monthly loan payments to the borrower's monthly income. If a bank client has several loans and spends more than 50% of his income on paying off debts, he will most likely be denied a new loan.
The fact is that it will become unprofitable for banks to have clients with high PIT : the higher the PIT indicator, the more funds the bank will be required to reserve for such clients in its accounts.
Previously, the risk ratio for consumer loans was influenced by only one metric - TLC ( total cost of credit ). This was reflected in capital adequacy standards through RWA ( risk-weighted assets ), Gazprombank analysts explained.
The new rules oblige banks to calculate the debt burden indicator for each borrower, and if it exceeds 50%, then 10–100 percentage points will be added to the existing risk ratios. In this way, the Central Bank expects to curb the uncontrolled growth of the unsecured retail loan . By the way, it is already declining (from 23.8% y/y as of May 1 to 21.1% as of September 1, 2021), and as a result of the introduction of new measures, this segment may slow down even more.
Gazprombank expects this figure to drop to approximately 16% y/y over the course of the year. The main driver of the slowdown should be consumer loans, the growth rate of which is projected to decrease from 24.4% y/y as of August 1, 2021 to 17%.
Features of perpetual bonds
Perpetual bonds are called such because they do not have a finite maturity date. The issuer is obliged to pay coupon income on them forever - at least as long as he exists.
Investors are interested in perpetual bonds because they allow them to receive income that is almost endless in time - it is enough to buy a bond once, and you don’t have to worry that payments will ever stop.
Perpetual bonds were first issued in 1753 in England, offering a coupon yield of 2.5%. These bonds are still in circulation and can be bought on the London Stock Exchange! True, they are practically illiquid.
The heyday of perpetual bonds occurred during the Second World War. Until now, many countries are paying hefty amounts of money on “war bonds.” But, again, for most of these issues there is zero liquidity - those who once bought such bonds do not really want to sell them. And this is understandable. The purchase has already paid for itself many times over, and such bonds bring net profit.
Perpetual bonds should be distinguished from 100-year bonds, which foreign issuers like to issue, for example, Disney and Coca-Cola have many of these bonds. These bonds are called "sleeping beauty" bonds and are usually held until maturity. Liquidity for them is also not very high.
It should be noted that most perpetual bonds are subordinated. This reduces the issuer's risks and increases the investor's risks, and here's why.
In bankruptcy, subordinated debt is the last thing to be repaid, after payments to ordinary bondholders and shareholders. Therefore, if the issuer of a perpetual bond goes bankrupt, the holders of the subordinated bonds are unlikely to receive anything.
In addition, if a company has problems with liquidity, then subordinated bonds can simply... be written off. Among financiers, this is called “forgiving yourself debts.” The procedure is complex, but often implemented in practice. This must be taken into account when purchasing not only perpetual bonds, but also any subordination.
Most often, states and banks act as issuers of perpetual bonds. For states, this form of borrowing is not very convenient, but in a critical situation it is very helpful. With the help of perpetual bonds, banks can replenish their authorized capital and thereby increase their loan portfolio. Therefore, banks issue such bonds with great willingness.
And here’s another interesting article: Where to start compiling an investment portfolio
Taxation
Personal income tax is not paid on the coupon income of Russian perpetual bonds. As with foreign bonds, it depends on the legislation of the issuer’s country. If you buy a perpetual bond from a US company, you will pay 35% tax (or 10% + 3% if you sign Form 8BEN).
And here’s another interesting article: What are bond coupons and why are they cut?
But if you buy a bond cheaper and sell it more expensive, you will need to pay tax in Russia. For example, if you bought a bond for 990 rubles and sold it for 1010, then you pay tax on 20 rubles.
In addition, if the bond is issued in a foreign currency, then a recalculation must be made taking into account the value of the foreign currency in rubles on the date of the transactions. For example, if you bought 5 bonds for 995 dollars at the rate of 1 dollar = 65 rubles, and then sold them for 1000 dollars at the rate of 1 dollar = 70 rubles, then you will make a profit:
(1000 * 70 * 5) – (995 * 65 * 5) = 350 000 – 323 375 = 26 625.
You will need to pay income tax on this amount – 3,461 rubles.
By the way, if in the above example the dollar had fallen to 60 rubles, then the investor in rubles would have received a loss of 23,375 rubles. It is clear that there is no need to pay tax on this result. Moreover, the loss can be carried forward to the next year to reduce the tax base.
Existing proposals of the issuer for bond issues
Along with the usual procedure for working with bonded loans, the financial institution is increasing its range of investment proposals. The new option is acceptable in the Alfa Mobile application.
Mobile bank counterparties are able to purchase structured exchange bonds in several currencies:
- Ruble Alpha IQ with a yield of no more than 13.5%.
- The same IQ product in euro signs with an offered income of up to 6% per annum.
- Alpha ROBOTS variety, presented in US dollars, with an increase of 5 - 7% of total annual income. It is important that the bill is correlated with the correlation index SG Rise of The Robots VT 7 Index, the basket of which consists of more than a hundred significant corporations in the field of robotics and artificial intelligence.
The bank has offers in various currencies
The privilege of this instrument is 100% security of the invested capital. The counterparty is provided with guarantees of the return of its own investments on the specified contractual date. An interesting precedent may be that when working with this proposal, the acquirer receives no less income in comparison with the level of dividends from the deposit.
For reference! The existing offer for OFZs implies a profit of up to 12%. This ruble strategy is based on Russian federal loan bonds. It includes long-term Federal Law bonds. At the same time, the emphasis in this program is on the growth of the domestic debt market.
