Home > Services >  Eastern European Return Bond

Eastern European Return Bond

September 2007

The bond has a fixed term of five years; provides 100% capital guarantee and participates in the growth of the emerging markets of Czech Republic, Hungary and Poland. Our first three bonds raised a total of over £6 million and were well-received for their simplicity and innovation.

Outline of operation of the bond

The bond has quite a technical structure but in simple terms it has a fixed five year investment term with a 100% capital guarantee (i.e. if £10,000 was invested the minimum return of actual money in five years' time is £10,000).

The return of the bond is linked to the CECEEUR index which is currently split 55% into the Polish exchange, 30% into the Czech exchange and 15% into the Hungarian exchange. If the CECEEUR increases, then 100% of such increase is added to the bond. If the CECEEUR index falls, no loss is suffered.

Eastern Europe

Poland, the Czech Republic and Hungary sit in the heart of Central and Eastern Europe and provide many skills, services and products to their neighbours in Western Europe, most notably Germany. Since their acceptance into the EU in May 2004, the economies of Poland, Czech Republic and Hungary have continued to prosper and the move has allowed increased trade between these countries and the more developed western markets.

The three countries received an estimated $26 billion of foreign direct investment in 2006 which is up from $9.1 billion in 2003, indicating steady growth in foreign investment.

100% guarantee with 100% participation

The second bond that was launched in association with the Newcastle Building Society in December 2006 was linked to the growth of the CELEEVR index. At that time we were able to negotiate a 70% participation rate. However, since December of last year, interest rates have risen to 5.75% which has improved the contract terms for this launch to 100% participation.

Overview

Central and Eastern Europe is becoming increasingly integrated into Western Europe with the main European powerhouse Germany benefiting from its close proximity to reduced capital and labour costings. The inclusion of Poland, Czech Republic and Hungary in the EU has also led to a greater awareness of these countries from a tourism perspective which will further help increase the development of these States.

Download the Eastern European Return Bond