Buying and Selling Debt Obligations

If you wish to invest in safe securities and receive a fixed income, SEB banka offers investments in the bonds of Latvian and foreign governments, as well as of business enterprises, with different maturity dates The return on the bonds is already determined at the time of the purchase.

A bond is a security, which assures the owner an annual income corresponding to a previously fixed interest rate and gives the right or receive the face value of the bond at the maturity date. In other words, a bond is a long-term debt instrument, which represents the legal obligations of the issuer. The buyer of the bonds lends funds to the issuer, who, in turn, promises to pay interest for the loan and repay the principal at a predetermined date. Bonds belong to fixed income type securities, because the interest rates and the maturity date are fixed for the life of the bond. At the time of the purchase, the buyer is cognizant of all the future fund flow from the bond %96 when the interest will be credited, what the face value is and when it will be repaid. If, however, the investor wants to sell the bond before the maturity date, then he should be aware that the price of the bond will depend on the bond market interest rates at the time of the sale %96 the return to the investor may be either higher or lower.

There exists a close connection between the movement of interest rates and bond prices %96 they move in different directions. That means that an increase in interest rates will result in a reduction of bond values, and, conversely, a decrease in interest rates will cause the value of the bonds to increase.

To obtain information about bonds issued by SEB banka please consult the SEB banka Bond Prospectus.