Fixed Income

Liability Market

Bond issuing is a profitable public scheme for finance that gathers speed in Bulgaria. This leads to development in the secondary liability market as well. At this moment besides in government securities you are able to invest in an increasing number of bonds – municipal, corporate, and mortgage. Every type of security has its own specifics.

When buying bonds the investor is interested in the profitability and security of his investment. Here are some of the bonds’ specifics:

Security

One of the essential benefits of bonds is the investment’s security. Both government and corporate bonds guarantee that the loan will continue to be attended until its maturity. Mortgage bonds guarantee their liability through bank loans for mortgages, while the owners of corporate bonds are the first in row to receive portion of the issuer’s assets in case of bankruptcy.

In addition, companies issuing bonds fall into the strict control of the Financial Supervision Commission and have to fulfill a number of requirements in order to perform the issue. This is a guarantee of the securities’ reliability.

Profitability

Another important criterion when deciding whether to invest in a given financial instrument is its profitability. Bonds have higher profitability than bank deposits (varying between 6 and 10% per year). Therefore, bonds are attractive solution not only because of their relatively high security, but also because of their good profitability.

Liquidity

Investors also take into consideration the fact that both government securities and corporate bonds are highly liquid since they can be daily traded on the BSE-Sofia. Therefore, transactions can take place in a couple of days and introduce new financial resources.

Refinance Opportunity

Government bonds and bills can both serve as a security and cheap refinance instrument for credits.