Exploring corporate bonds as investment options

Corporate bonds are lucrative investment solutions issued by companies. Investing in them is fruitful, based on the pattern of investment and the bonds in question.

In their quest for new investment horizons, investors have started exploring a useful option known as the ‘corporate bond’.

Corporate bonds are debt securities that are issued by companies and which are sold to investors via intermediaries such as investment brokers. The bond is issued against the company’s revenues and the future scope of its business. In some cases, the business’s physical assets are pledged as collateral for the bond before being issued.

Since corporate bonds are riskier than Government bonds, their interest rates are higher. The rates continue to be high even for top grade companies with a bankable return rate. They are issued in certain denominations or ‘batches’. Once the investor purchases the bond, the company pays interest on it till the bond matures. On reaching maturity, the investor can claim the original value (known as ‘face value’) of the bond.

In some cases, especially when the market rates decline, corporate bonds may be recalled and investors may be allowed to sell the bond before maturity. Corporate bonds normally have fixed interest rates and these largely remain stable throughout the tenure of the bond. Certain investors purchase bonds that come with floating (also known as ‘variable’) rate of interest only.

Why invest in corporate bonds?

They offer high returns. Their returns are normally higher than Government bond yields.

Guaranteed returns. If the bonds are issued by premium companies with a more than good performance, the returns on them are assured.

Investment basis the rating. Every corporate bond issued in the GCC region carries a rating. This rating is granted basis the bond’s credit history and the company’s revenue and repayment capability. The higher the rating, the safer it is to invest in it. Hence, investors can simply check a bond’s rating before investing in it.

Diverse portfolio. These bonds give investors the chance to create a diverse portfolio of investments, from various industries and sectors.

Highly liquid. Though investment advisors recommend that you do not do so, it is possible to sell the bond before maturity quite quickly.

Tips for investing money in the GCC capital markets

We present three tips that will help you maximise your investment in the GCC markets. Read on before you proceed.

The country we live in and those around us have traditionally registered stable rates of economic growth through the years. The economy has been bolstered by the presence of natural and mineral resources, as also a handy proximity to the seas and ports. While trade channels have been open via waterways since time immemorial, new trade channels with other countries have actively been set up by GCC country Governments in recent years.

Combined with innovations and development in technology, particularly in the Internet arena, the growth of business in these countries has seen a steady upward climb in the past few years. There have certainly been some economic bumps along the way, but Governments have been quick to respond with realigned policies to stave off serious financial downturns.

If you wish to invest in the GCC region for high private equity returns, you must:

1 Examine current trends. With a growing population of upwardly mobile, 20-something population with a lot of disposable income, spending is diverted more towards cars, houses, food, retail therapy and general entertainment. The countries in the GCC are actively moving away from dependence on oil and natural gas, and encouraging business trends that support the needs of a younger demographic. This is ably supported by newer technological expertise for faster growth.

2 Sectors that are looking up. The GCC region is looking up for business with several avenues for growth opening up in housing, commercial expansion as more foreign companies set up offices, road and communications infrastructure, mining, transport, etc. Before investing in any sector, it is important to note its projected growth trajectory to gauge the private equity returns on the same. In this context, it is helpful to speak to a financial and investments advisor who can give inputs on the faster growing sectors.

3 The best investment and brokerage firms to tie up with. Private equity returns are assured with the right information, correct investment tools and timely guidance on when to invest and when to pull out. These financial activities require the able assistance of a seasoned group of experts that can oversee your investment and provide inputs as per latest market news. Tying up with a reputed brokerage firm that guides you on asset allocation and prepares customised reports on domestic and international rate trends can help you make the right investment decisions in the GCC.

A broker that makes trading in the markets simple and productive

NBK Capital is a leading brokerage firm for many reasons, and presenting uantifiable solutions is just one of them.

When it comes to trading stocks, an important entity that is part of the investment process is the trader or broker. Traditionally, the broker has been an individual or company that invested money on behalf of a client and oversaw the working of the fund. In those days, customers would more or less rely entirely on the broker for information and analysis of the markets.

But today, trading has shifted online for most investors around the world. They like the ease of access to trading tools and the vast receptacle of latest information that the Internet is. However, trading online is not as straightforward as it first appears. There are many potential bottlenecks that many investors cannot navigate without expert guidance. This guidance is provided by online trading companies.

Online trading companies are brokerage firms comprising teams of experienced professionals who are dedicated to working in specialised niches as per their customers’ investment plans. Since the company will (quite literally) hold investors fortunes in its hands, it must be chosen with great care.

In this context, it is pertinent to mention one of the country’s online brokerage firms, NBK Capital. It is one of the foremost trading companies in Kuwait with unparalleled experienced and know-how to offer each individual investor and/or company. This trading company in Kuwait blends its world class brokerage solutions with the best ever investment strategies to help investment in Kuwait, the GCC and also major international capital markets.

NBK Capital can be credited with some of the most significant capital market investments in the region in recent times. Clients working with the firm attest to the company’s transparent manner of working, and the superior research tools and data that it equips each customer with. Using NBK’s many services, customers are able to transfer monies with utmost confidence across a range of sectors and industries, backed by the company’s deep study of domestic and international markets. Besides, it offers exclusive brokerage services in the HNWI and institutional domains, and runs a 24/7 support centre to help clients trade as per international business hours.

Accuracy, trust, transparency and knowledge – these are hallmarks of NBK Capital’s solutions and services in the region. It is little wonder that investors in the region prefer this Kuwaiti trading company over others!