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Bonds, Eurobonds

Unlike stocks, bonds are instruments of guaranteed income. As a result, these instruments especially appealing to investors who have accumulated a certain sum of money and aspire to for an extended period of time to regularly and securely earn income.

Investing in government bonds is widely accepted as the safest (nominally riskfree) investment. In addition to this, returns on this kind of investment, as a rule, aren't high and often are less than bank deposit rates.

A more profitable type of bond that has gained widespread popularity in Ukraine are cooperate bonds issued by companies. Investing in corporate bonds, the investor takes on the risk of a company's inability to pay. Since bonds are less liquid than stocks, the investor should clearly understand the permissible time period of his investment.

In times when a national currency depreciates, one bond exists that has nearly become the main instrument for protecting one's savings from currency fluctuations. Eurobonds offer this opportunity, which are denominated in a foreign currency (mainly in U.S. dollars) and correspondingly their coupon payments are paid out in that foreign currency.

A eurobond is a long-term coupon bond issued in a foreign currency other than the currency of the issuer's country. When investing in Eurobonds the investor should take into account a number of factors among which are high minimum investment requirements (as a rule, starting from $50-80 thousand), low liquidity of the purchased bonds and a substantial cost burden when the investment amount isn't large.

Practice shows that investment in eurobonds is far more successful when following the principle of diversification. That is, constructing a bond portfolio made up of different borrowers (bond issuers). Usually these are large global corporations, large global banks and government bodies issuing bonds with different maturities to investors.