Enjoy periodic coupons and redemption at maturity
A bond is a recognition of the issuing body's debt. The bond has a fixed term, an interest rate that entitles the holder to periodic coupons and a redemption at maturity.
A bond has a fixed borrowing term. In practice, its issuer borrows the funds for a set period of time, and you can then take out one or several bonds. Each bond represents a participation in this loan.
A bond is a recognition of the issuer's debt to you, the bondholder. You can therefore receive any interest in the form of coupons. In this case the applied interest rate may be fixed or variable.
A bond gives a right to repayment of the initial capital invested by the Issuer at Maturity. In general, this is 100% of the nominal value of the bond (excluding fees and charges), except in the event of bankrupty or default by the issuer.
The main risks are market risk, insolvency risk of the Issuer, risk of capital losses, exchange rate risk and liquidity risk. You can find this information further down this page under 'Main risks'.
Let's take an issuer. This could be: a large private company (Belgian or foreign), a bank, an institution, a public organisation (Belgian or foreign) or an international organisation.
This issuer issues a long-term loan facility; in other words it borrows money. You can then subscribe to one or several bonds. Each bond represents a participation in this loan. In concrete terms, a bond is a recognition of the issuer's debt to you, the bondholder. You can then receive any interest (coupons).
A bond has:
- a fixed borrowing term
- an issue price (if bought during the subscription period on the primary market) or a purchase price (if bought on the secondary market)
- an interest rate that entitles the holder to payment of a periodic coupon
- a redemption price at maturity (in general, 100% of the nominal value of the bond), except in the event of bankruptcy or default by the issuer.
Bonds are issued on the primary market. It is possible to subscribe to them during a subscription period. A bond may be issued at par (issue price = 100% of nominal value), above par (e.g. 102%) or below par (e.g. 98%).
Once they have been issued, bonds may be traded (purchased/sold) on the secondary market, where prices vary daily: when interest rates rise, prices fall and vice-versa.
- Market risk: the value of bonds may fluctuate as a result of various factors, including changes in interest rates. Investors wishing to sell their bonds prior to the final maturity must do so at the market price. This may result in a gain or loss from the par value, favourably or unfavourably, due to various factors.
- Insolvency risk of the issuer: Is the risk that the invested capital and the coupons will be partially or not repaid in the event of bankruptcy or default by the issuer.
- Risk of capital losses: Due to various factors, the value of the bond will rise or fall on the secondary market over time. If the investor sells before the maturity date this may incur capital gains or losses. No guarantee is provided as to the recovery of your initial investment.
- Exchange rate risk: The exchange risk has to do with the possibility that the return on the investment will fall as a result of an unfavorable evolution of the currency in which the obligation is listed.
- Liquidity risk: The liquidity risk is related to the possibility that the investor may encounter difficulties in recovering his entire invested capital before the maturity date.
For all the costs and taxes associated with bonds investmenst, we refer to:
Public offer of bonds by the company Bekaert NV
- Company: Bekaert NV
- Bekaert is a world market and technology leader in steel wire transformation and coating technologies. Bekaert (Euronext Brussels: BEKB) is a global company with almost 28,000 employees worldwide, with headquarters in Belgium and a combined turnover of 5 billion euros in 2019.
- Type of product: Public offer of bonds under Belgian law.
- Investment objective: This bond offers a fixed return over a period of 7 years and a reimbursement of the invested capital at maturity, except in case of default from the Issuer and/or Guarantors.
- Key features of the bonds:
- Issuer: NV Bekaert SA, limited liability company governed by Belgian law
- Issue and payment date: 23 October 2020
- The Bonds are dematerialized, direct, unsubordinated, unconditional and securities subject to provisions of Negative Security, subject to Belgian law.
- Neither the Issuer nor the bonds have a credit rating
- Listing: the application for listing of the bonds on the regulated market of Euronext Brussels has been made.
- Use of proceeds: NV The proceeds from the issue of the Bonds (which are, before deduction of the costs, fees and charges related to the Bonds (which are estimated to be approximately EUR 200,000, see “Subscription and sale – Costs, Fees and Charges (Part 10), expected to amount to EUR 200,000,000) will initially be held in cash by the Issuer and applied in full on 9 June 2021 to repay part of the outstanding amount of EUR 380,000,000 under the 2016 Convertible Bonds (as defined further in the Prospectus), which will mature on such date.
- Offer: The Subscription Period is from October 9, 2020 (9 am) to October 16, 2020 (5:30 pm). The sales restrictions that apply to this bond issue are stated in the Prospectus. Private investors are encouraged to subscribe to the Bonds on the first working day of the subscription period, namely October 9, 2020, before 5.30 pm to ensure that their subscription is taken into account in the allocation of the bonds, which is subject to proportionate reduction of their registration in case of over-subscription. Different re-allocation percentages may apply to subscribers depending on the financial intermediary with whom they have subscribed. ). Early closing is possible, but can only take place at the earliest on the end of the first day of the Offering Period, namely October 9, 2020 at 5.30 pm.
- Duration: 7 years: until 23/10/2027
- Issue price: 101.875% of the nominal value (1,875% placement and distribution commission fee included). The price of the bond can be found back at all times on Euronext Brussels.
- Nominal value: EUR 1,000
- Minimum subscription amount: EUR 1,000
- 100.00% redemption of the nominal value at maturity, except in the event of bankruptcy or default by the issuer.
- Gross annual coupon (before fees and taxes): 2,750% (yearly payable on October 23th)
- Actuarial net return: 1.639% based on the issue price of 101.875% and assuming a repayment at 100% of the nominal value at maturity and after deduction of a withholding tax of 30%.
- Risk category according to ING Belgium NV/SA: 4, on a scale of 0 (the lowest) to 6 (the highest). The risk category specific to ING Belgium is determined on the basis of an analysis of various factors, including the credit risk of the issuer, the risk of the market in which the Issuer operates and the general economic situation. This analysis is refined on the basis of the specificity of the Public Offer such as the maximum size of the Bonds (and the related liquidity), their maturity and the risk with respect to the currency. This risk category specific to ING is not a credit rating of either the Bonds or the Issuer. In total we distinguish 7 risk categories, ranging from 0 (lowest risk) to 6 (highest risk). This analysis does not take into account certain important risk categories, i.e. the market risk when reselling before the maturity date of the bonds.
- Costs: Placement and distribution commission of 1,875% charged to the private investor, included in the Offer Price. Financial service: free with ING in Belgium. When selling the Bonds before the maturity date (on the secondary market), a brokerage fee will be due (see Tariff Card). Costs for custody of the Bonds in a securities account: at the expense of the investor (the rates applicable at ING Belgium NV can be found via ing.be rates and regulations).
- Tax: The income arising from the bonds, which are collected in Belgium, are now (i.e., at the date of the product sheet) subject to a withholding tax of 30% based on the gross amount. The withholding tax constitutes a liberating tax for Belgian natural persons, which means that it is not necessary to declare income arising from the Bonds in the annual tax return. However, some investors are eligible for an exemption under certain conditions. Tax on stock market transactions when buying or selling on the secondary market, if such a transaction is entered into or carried out in Belgium: 0.12% with a maximum amount of EUR 1300.
- Warning: These Bonds constitute unsecured debt instruments. An investment in the Bonds involves risks. By subscribing to the Bonds, investors lend money to the Issuer who undertakes to pay interest on an annual basis and to reimburse the principal on the Maturity Date. In case of bankruptcy or default by the Issuer, the investors may not recover the amounts they are entitled to and risk losing all or part of their investment. The Bonds are intended for investors who are capable of evaluating the interest rates in light of their knowledge and financial experience. An investment decision must solely be based on the information contained in the present Prospectus. Before making any investment decision, the investors must read the Prospectus in its entirety (and, in particular, Part 2: Risk factors on pages 10-24 of the Prospectus). Investors should in particular note that the long tenor of the Bonds might increase the materiality of the identified risk factors related to the Issuer and the Bonds, that the Issuer’s debt ratio is substantially increased over the last three to four years and that it is exposed to a (re)financing risk.
- Risk factors:
There are certain factors that may affect the Issuer's ability to fulfill its obligations under the Bonds (see Part 2: Risk factors on pages 10-24 of the Prospectus). The principal risks related to the Issuer include, without limitation:
- adverse global economic and political conditions because of its global presence and a relatively strong dependency on down-cycle industries including the tire and automotive, oil and gas, and construction markets (*);
- adverse business performances or changes in underlying economic climate, which may result in impairment of assets (*);
- adverse business performances or changes in underlying economic climate, which may result in a credit risk on contractual and trading counterparties who may become unable to make payments to the Issuer in a timely manner or at all (*);
- wire rod price volatility, which may result in margin erosion;
- source dependency, which may result in a cut off from material supplies or higher raw material prices charged by alternative suppliers (*);
- the Issuer’s high debt ratio, which may result in a (re)financing risk;
- failure to adequately protect the Issuer’s intellectual property; and
- risks related to regulatory and compliance (*).
The COVID-19 pandemic has increased the potential impact of certain of these risks and the longer term impact depends on a range of factors including the duration and scope of the pandemic, the geographies impacted, the impact on economic activity and the nature and severity of measures adopted by governments, including restrictions in business operations or travel, mandates to avoid large gatherings and orders to self-isolate. This applies mainly to the risk factors identified with an (*) above.
There are also risks associated with the Bonds, including a range of market risks, including:
- in an insolvency scenario, the Bonds will be subordinated to any current or future secured indebtedness of the Issuer and to any current or future (secured or unsecured) indebtedness of the Subsidiaries of the Issuer;
- the Issuer may not have the ability to make interest payments or to repay the Bonds at maturity or in case of an Event of Default;
- the long tenor of the Bonds might increase the materiality of the identified risk factors related to the Issuer and the Bonds
- the issue price and/or the offer price of the Bonds will include certain fees and commissions to be paid by investors, which may have an adverse effect of the value of the Bonds;
- the Bonds are fixed rate bonds that are exposed to interest rate risks due to changes in market interest rates; and
- there is currently no active trading market for the Bonds and the Bonds are exposed to secondary market risks (i.e., investors may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments).
- Available documentation:
Before making an investment decision, potential investors must read the Prospectus to fully understand the potential risks and benefits associated with the decision to invest in the securities. The Prospectus, drawn up in English, was approved by the Financial Services and Markets Authority (FSMA) on 6 October 2020. The approval of the Prospectus by the FSMA does not imply any recommendation of the Bonds offered.
- Prospectus in English
- Summary of the Prospectus (English)
- Product sheet (Advertising) in French or in Dutch
- More information on www.bekaert.com. Please note that you are leaving the ING website.
This document is advertising prepared and distributed by ING Belgium NV/SA. It does not contain any investment advice or research. This document is therefore not prepared in accordance with the provisions on the promotion of independent research in the field of investment and is not subject to the prohibition to act prior to the dissemination of research in the field of investment.
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