Why buy the subordinated bond?
- It reflects the quality of the Erste Group Bank as a strong Central European bank, offering concurrently a higher yield compared to classical bond products.
- Attractive fixed interest of 1.5 % p. a. in the first year.
- Attractive floating interest from 1% p.a. to 4% p.a. in the following years.
- Regular half-year disbursement of interest.
- The prices of bonds are given as the percentage of the nominal value. Purchase price means that the client is selling, selling price means that the client is buying.
- The holder of the subordinated bond bears the issuer´s credit risk.
- Date of issue: 18 June 2018
- Currency: Czech crown (CZK)
- Nominal value of a single bond: CZK 10,000
- Liquidity: daily according to the Exchange Rate List of Česká spořitelna
- Minimum investment: 1 piece
- Fixed interest (in the first year): 1.5% p. a.
- Floating interest from the 2 year until the maturity date: 6M PRIBOR, however at minimum 1% p. a., maximum 4% p. a.
- Brokerage fee: 1.5% of the volume
- Interest payout: 2x a year, always at 18 June and 18 December
- Issuer: Erste Group Bank AG
- PRIBOR rate: https://www.cnb.cz/cs/financni_trhy/penezni_trh/
- Selling price: according to the current Exchange Rate List of Česká spořitelna, depending on the market trend
- Distributor costs valid at the sale stating date: approximately 0.2% p.a., you can find the exact wording in the Agreement for Purchase of Podřízený dluhopis EGB Fix-To-Float / 2028
- Issuer costs valid at the sale starting date: you can find the exact wording in the Notification of Key Information
- Specific risks associated with the subordinated bond:
If the issuer finds itself in a situation requiring increase of regulatory capital, all measures will need to be taken first to internally create capital in accordance with applicable European legislation. The regulatory authority may order the transformation of subordinated bonds into equity (shares), reduction of their principal, or their full depreciation. If the issuer, in this case Erste Group Bank AG, is liquidated or becomes insolvent, all unsubordinated debt obligations shall firstly be settled (e.g. mortgage bonds, senior bonds) and only then will investors in subordinated bonds receive their funds. A further risk for subordinated bond holders is the possible limitation of their liquidity. It cannot be ruled out that in future it will not be possible to trade bonds on any market nor sell them before their maturity date. In view of these risks subordinated bonds offer the bonus of a higher yield.