BluOr Bank 10% Bonds: an opportunity to invest and profit not only for professionals

Latvia's central bank forecasts inflation to reach 1.5% this year and rise to 2.1% next year. This means that the purchasing power of money will decrease, affecting savings kept in banks or at home, as they will lose value over time. The solution to inflation is to invest free capital in stocks, bonds, mutual funds, and other financial instruments. Among these tools, bonds stand out as a reliable and straightforward option, suitable for both seasoned investors and those with less knowledge and time for investment management.

Unlike more complex financial products, bonds offer simplicity and stability. They don't require active management or market analysis, as their yield is known in advance at the time of purchase, and the risk is relatively low. Bondholders know when they will get their money back and how much interest they will receive. The only potential risk is the issuer’s insolvency. However, these risks can be minimized by choosing bonds from reliable issuers, such as government institutions or banks that are closely regulated by national and international authorities.

Subordinated bonds — a new instrument in the market

One of the lesser-known investment instruments on the Latvian market is subordinated bonds. They typically offer higher yields than classic bonds and are purchased for a longer period — 7 to 10 years. Banks generally have the option to redeem these bonds after five years with regulatory approval. This means the investment term often ends up being five years. Potential investors in this instrument include not only banks, investment funds, and insurance companies but also private individuals — both experienced investors and beginners.

Many large European banks offer subordinated bonds, but in Latvia, only a few banks do so, and local banks often don’t make these offerings publicly available. Among the few issuers of subordinated bonds in Latvia is one of the country’s largest banks, BluOr Bank. The public offering of these subordinated bonds will take place from September 9 to 27. These bonds are expected to be listed on the Nasdaq Riga Baltic Bond List, and once trading begins, they can be freely bought and sold on the regulated market.

What you need to know about BluOr Bank’s subordinated bonds:

• Fixed annual interest rate of 10% for investors

• Interest paid quarterly — 4 times a year

• Minimum investment amount — 1,000 euros

• Bond maturity period — 10 years (with the possibility of redemption after 5 years, subject to approval by the Bank of Latvia)

A win-win for both bond buyers and Latvia’s economy

The funds raised through the issuance of subordinated bonds are typically used to increase the bank’s capital to expand its services, mainly to boost lending volumes and strengthen its market position. This, in turn, helps the country’s economy grow and supports local businesses. BluOr Bank is a 100% Latvian bank, meaning that the main beneficiary of its bond issuance and planned development is Latvia’s economy.

“The beneficiaries of this subordinated bond issuance are both borrowers — in BluOr Bank’s case, Latvian entrepreneurs — and bond buyers, who receive a fixed return that exceeds the expected inflation rate over the coming years,” comments Dmitrijs Latiševs, Chairman of the Board and CEO of BluOr Bank.