If you just want to save your savings, then a great option for this is bank deposits. In the case where the task is not only to preserve what has been accumulated, but also to increase it, it is best to find alternative tools. In this area, one of the most interesting and promising options is bonds in foreign currency. There is not as much information, or even proposals, on this issue in Belarus as we would like. The more useful our material will be for you: in the article we will tell you about all the options for foreign currency bonds that are on sale today, and we will give some useful recommendations for those who want to invest profitably.
An obvious advantage of all foreign currency bonds issued on the territory of the Republic of Belarus is a higher interest rate compared to ordinary bank deposits. Thus, a person who has placed a deposit in a bank in foreign currency can currently count on only 3% per annum; who purchased bonds issued by a particular enterprise or bank - often from 6% and higher, depending on the conditions prescribed by the issuer.
You should not think that transactions with these types of securities are a privilege only for legal entities: individuals can also buy bonds in dollars and euros. A bond is understood as a special type of security, the purchase of which for a fixed price allows you to count on the payment of appropriate interest. In addition, income received from such securities is not subject to tax - unlike bank deposits. Another advantage is the possibility of selling the bond to any third party.
What it is?
Eurobonds are essentially the same as simple bonds. The prefix “euro” in no way means that they are traded in the euro currency. They received this name due to the fact that for the first time this kind of paper appeared in Europe (in Italy) in 1963. The peculiarity of these securities is that they are usually issued in foreign currency for the international market . Eurobonds are placed in almost all currencies around the world: dollars, euros, pounds, francs, yuan, yen, the list goes on. But on the Russian market, it is dollar bonds that are in greatest demand.
In simple words, Eurobonds are the same bonds, only denominated in a foreign currency other than the national one. Therefore, there are no ruble Eurobonds for citizens of the Russian Federation.
In slang they are also called “Eurobonds” . Unlike bonds issued only for the Russian market, Eurobonds are placed with the help of a special international organization (underwriters syndicate), which includes various brokers from several countries, banks, and large investment companies. Such securities have their own specific placement rules and strict requirements; they can be placed simultaneously in several countries.
Governments of countries also issue their Eurobonds. Thus, the Ministry of Finance of the Russian Federation issues its OFZs in foreign currency, they are denominated in dollars . There are several securities in circulation with good yields. The reliability of Eurobonds is considered higher than that of simple Russian bonds, because these are international debt obligations , and it will be very unprofitable for issuers to spoil their reputation on the world stage by not paying off debts.
Who issues valuable assets in Belarus?
Bonds in the state are issued by most banks with a certain periodicity, but in recent years this has been done by developed enterprises and large-scale plants. The retail chains “ProStore”, “New World”, and JSC “Chisty Bereg” resorted to this action.
Major issuers in the banking sector are Belagroprombank with bonds of various attractive options. But only legal entities and individual entrepreneurs can become owners of this type of debt console. This means that Belagroprombank bonds are not yet available to individuals.
For reference! Since August of this year, Belgazprombank, which has been successfully working in the direction of investment, has opened the current sale of bearer currency bonds of 41 and 42 issues specifically for individuals.
Belarusbank issues bonds in foreign currency sold in the Internet banking system. A personal account – “deposit” in the depository, for storing purchased bonds, is opened without payment. But the return of invested funds when selling bills before the stated repayment period is possible only on the secondary market, and early repayment by the issuer of this product is not carried out.
Both Belarusbank and other financial organizations issue bonds.
Can it be purchased by individuals?
We will answer right away - yes, it is possible, through a broker. But it wasn’t always like this, there were some obstacles, let’s talk about everything in order.
At the beginning of its journey, the Eurobond market existed exclusively outside the exchange (it was interbank). However, since 2014, this type of securities entered circulation on the Moscow Exchange, that is, it became available on the official exchange market of Russia. The initial lots had a very high price, the minimum lot price was $100,000.
In 2015, the Moscow Exchange, in response to the fact that a huge number of individuals wanted to purchase Eurobonds, agreed with Russian issuers to reduce the minimum amount to $1,000 . This opportunity arose thanks to investor schemes involving pooling funds and making transactions on the interbank market, with the purchase of Eurobonds at the old price of $100,000. The creation of such instruments has made the purchase of Eurobonds more accessible to individuals; any private investor can now invest in Eurobonds.
Despite their availability, the main buyers of Eurobonds are large investment, insurance or pension funds and other large players. As we have already said, the face value of one paper is usually $1000. But there are securities with a par value of $200,000 per bond, their yield is better, but private investors can rarely afford to buy them at such a high cost.
Investor reviews
Investors are also different. Stability is important to some, profitability to others. Everyone notes the big advantage of the Ministry of Finance's foreign currency Eurobonds - tax exemption, reliability and high liquidity.
Which is better – foreign currency bonds of the Ministry of Finance or commercial Eurobonds
There is no clear answer to this question. Risk-ready investors (individuals) are trying to grab a goldfish in the ocean of corporate Euro-securities. Those who live by the principle “The slower you drive, the further you will go” choose reliable foreign currency securities of the Ministry of Finance. But no one disputes the merits of currency Eurobonds.
Types of foreign currency bonds in Russia and their yield
The purpose of the Eurobond market is to allow issuing companies or the state to receive borrowed funds in foreign currency for their internal economic purposes. This is much more convenient than issuing ruble bonds first and then losing money on currency conversion. Issuers take on significant obligations, but they expect to make a profit greater than the amount borrowed.
The advantage of the investor is that he has the opportunity, with relatively low risks, to receive a predictable and stable income in foreign currency, often greater than that of other instruments that do not require constant active trading (for example, bank deposits).
Government OFZs in foreign currency
The state is also involved in issuing bonds in foreign currency ; the issue number of such Eurobonds begins with the word “Russia”. The minimum value of foreign currency government bonds is $1000. The state is responsible for the reliability of investment instruments of this category, which ensures maximum invulnerability of the client’s finances when investing funds. The Ministry of Finance is responsible for issuing these securities. You can read more about government bonds of the Russian Federation here.
The yield on foreign currency government bonds at a favorable rate is 7-11% per annum, which is higher than offers in many banks. The owner of the paper receives a high income during the entire period of the bond. But there is a nuance, the market value of securities with such a high interest rate is much higher than the nominal value (can be 140% - 180% of the nominal value), and such a percentage may not work out, be careful.
Municipal
Bonds are issued through guarantees of municipal property , which allows municipal bonds to rank second after state bonds in terms of reliability. The minimum price, like that of government bonds, is $1000. The yield on securities of this type is 1-2% higher than government securities. It makes sense to take out municipal bonds before they mature, since they are characterized by low liquidity (they can be sold during this period at a price close to the market). Unfortunately, at the time of writing, there were no municipal bonds in foreign currency in circulation on the market. The latter were repaid in 2016.
Corporate
Corporate bonds are a type of investment instrument that brings high income to those who are well versed in risks and are willing to trade large amounts. Before investing money in these securities, it is worth understanding the credit qualities of the borrower (corporation) to whom the money is transferred. Russian companies are successfully issuing foreign currency bonds.
The yield on bonds of first-tier companies (Sberbank, Rosneft, Gazprom, VTB, Rosselkhozbank) is lower than that of second- and third-tier organizations, but it is higher than rates on foreign currency deposits in banks and can reach up to 11% per annum. The minimum denomination of corporate Eurobonds is also $1,000. At the same time, investing in these giant companies is safer, since the money back guarantees are very high. The income from bonds of these companies is higher than from a bank deposit.
Banks themselves can also issue Eurobonds; they can also be purchased on the stock exchange.
You can learn more about the classification of bonds according to the main parameters in our separate article.
Foreign issuers
Foreign bonds are securities issued and placed by an issuer (an organization that issues securities to finance its own activities and bears obligations to their owners), in the currency of a foreign state on its territory.
Accordingly, foreign companies act as organizations issuing foreign bonds. Eurobonds are an example of foreign bonds.
Such investment instruments are purchased only in foreign currency, which carries a risk for the investor in the form of a possible jump in exchange rates. However, the speculative possibilities of bonds in such a situation increase, and interest rates on them turn out to be higher than those of foreign currency deposits. Due to the fact that the minimum investment in foreign bonds is $1000, they are available for purchase by individuals.
TOP most profitable
The most affordable Eurobond of the Ministry of Finance is RUS-28. Maturity date 06/24/2028, yield to maturity 4.11%. Now you can buy a lot with a face value of $10,000 for 16.5 thousand dollars.
The current yield to maturity is only 4.11% per annum, because the cost of paper is as much as 165% of the face value. However, the coupon for today gives a yield of approximately 7.72%.
To get it, we buy the minimum lot for $16,509 and wait for a payment of $1,275 (this will be our 7.72%). You can hold the paper for a couple of years, and then sell it without waiting for maturity, locking in a profit. True, it’s not clear what kind of liquidity it is.
The remaining issues of the Ministry of Finance with a face value of 100 and 200 thousand dollars require serious funds. Of these, the most profitable can be identified:
- RUS-43. Maturity date 09/16/2043, par value 200,000 USD, yield 5.41
- RUS-42. Maturity date 04/04/2042, par value 200,000 USD, yield 4.93
- RUS-35. Maturity date 03/28/2035, par value 200,000 USD, yield 4.95
- RUS-47. Maturity date 06/23/2047, par value 200,000 USD, yield 4.91.
How to choose and what are the risks?
To obtain reliable income when choosing foreign currency bonds, an investor should pay attention to the following parameters:
- yield to maturity;
- depreciation;
- maturity date;
- reliability;
- liquidity;
- taxation;
- ACK (accumulated coupon income).
Websites (Finama, Rusbonds) can help in choosing foreign currency bonds, which have all the necessary information about a particular issue of securities with all the necessary parameters.
IMPORTANT! It is worth paying attention to the fact that there is a currency risk, therefore, when choosing Eurobonds, it is recommended to pay attention to the forecast for changes in the foreign currency in which the investment is planned. The price of securities on the market can significantly exceed the nominal value, so there is always a risk that the price will drop so much that you will have to hold foreign currency bonds for a long time to insure against losses.
We also have a separate article where we analyze in detail the process of purchasing and selecting Eurobonds and all the nuances associated with it. To put it briefly, you need to analyze all available Eurobonds: look at their parameters, calculate future profitability taking into account the period of the planned investment, take into account currency risks and make pessimistic and optimistic forecasts.
Corporate
In addition to government bonds, you can find suitable corporate securities. They are produced for certain projects. Typically, payments on them are characterized by higher profitability. By visiting user forums, you can find interesting investment options. https://smart-lab.ru/bonds/
The information is presented in the form of tables. A potential investor evaluates several dozen proposals. By exchanging information between other forum participants, you can choose an interesting option.
Attention! Experienced users recommend logging into such forums from different devices. If a user appears quite often, then you can suspect a bot (a robot that lures you to certain sites).
Available for purchase
If an investor is interested in certain types of bonds, they should familiarize themselves with the terms of purchase. Some securities can be purchased by contacting a broker. Registration is required, subsequent communication is carried out online.
JLLC "CONTE SPA"
JLLC "CONTE SPA" issued loan bonds on September 13, 2018. The nominal value is $1,000. The guaranteed return on them is 5.25%.
The volume of the issue was $4,000,000. Maturity date: 09/10/2024
The issuer makes regular repayments (quarterly).
Payments are made in BYN at the official rate on a specific date.
Agrofinance LLC
The bonds of Agrofinance LLC are quite attractive. They provide for payments at the rate of 7.50...7.75% per annum. Full information is presented on the website https://lacerta.by/agrofinans.
You can purchase these securities for dollars or BYN.
Payments are made once every 4 months.
An attractive feature for the user is the absence of commission when buying and selling.
BPSSberbank
Sberbank of the Republic of Belarus issues its bonds. Information about them is on the website https://www.bps-sberbank.by/page/obligacii-banka.
Belgazprombank
For those wishing to purchase high-yield bonds, Belgazprombank offers its securities. You can read information about them on the website https://belgazprombank.by/personal_banking/operacii_s_cennimi_bumagami1/obligacii_banka/.
Belarusbank
Belarusbank offers its loan bonds for individuals. https://belarusbank.by/ru/fizicheskim_licam/33357/28809/obligatsii.
LLC "TENKinvest"
The investment fund TENKinvest LLC has posted information about its proposals on the resource https://belarusbank.by/ru/fizicheskim_licam/33357/28809/32729/34773.
ODO "IRON"
Information about the offers of ALC "AIRON" can be found on the site https://www.airon.by/news/23.
LLC "PremiyaMaster"
LLC "PremiyaMaster" invites you to consider its proposals on the website https://premiamaster.by/cp15318-prospekt-emissii-prodolzhenie.html.
LLC "Zhilstroykomplekt"
Zhilstroykomplekt LLC offers housing bonds https://www.belmarket.by/zhilishchnye-obligacii-vmesto-korporativnyh.
ASB Leasing LLC
Leasing has presented its investment options https://www.asbleasing.by/news/company/56.html.
CJSC "EVROOPT"
Bonds of CJSC "EVROOPT" are described on the website https://evroopt.by/zao-evroopt-vypustilo-obligatsii-dlya-yuridicheskih-lits-i-naseleniya/.
Intellect-Leasing SOOO
Information about Intellect-Leasing SOOO is located at https://belinvest.by/emitent_list/intellekt-lizing-sooo/.
Premier Market LLC
Premier Market LLC is supported by the National Bank of the Republic of Belarus https://myfin.by/obligatsii/ooo-premer-market.
StepLine LLC
Data about StefLine LLC is presented at https://myfin.by/obligatsii/ooo-steflayin/steflayin-op-1.
Gamma Retail LLC
Gamma Retail LLC represents a network of retail stores. This is one of the most reliable investment options. https://myfin.by/obligatsii/ooo-gamma-riteyil.
ODO "HERE and TAM Logistics"
ODO "HERE and TAM Logistics" is a rather attractive investment option. https://myfin.by/obligatsii/odo-tut-i-tam-logistiks.
How to buy?
Purchasing Eurobonds is possible from a regular account, as well as from an individual investment account (IIA) with a broker. To purchase securities, the account must have the currency in which the purchase is planned.
A convenient way to purchase is to purchase bonds through the QUIK trading terminal. Money in rubles must be transferred through the program to the foreign exchange market, where you can buy the required currency at the net exchange rate. We add the necessary columns (name, bid price, ask price, maturity, yield to maturity, cash flow and coupon size) to configure the table of current parameters. Having transferred the currency to the exchange section, we buy foreign currency bonds in the required quantity.
Taxation nuances
Eurobonds for individuals (except for Eurobonds of the Ministry of Finance) are subject to income tax at a rate of 13%. Income is considered to be payments on coupons and profit from sales - the difference between the purchase price and the sale price.
The investor, as an individual, does not pay taxes himself; a broker (management company) does this for him. Tax agents are required by law to calculate, withhold and transfer to the budget all necessary amounts of taxes.
Tax will not be levied on Eurobonds of the Ministry of Finance from 2021, which distinguishes them favorably from other securities.
