Retrocession clients email hero image 640x200 Retrocession clients email hero image 640x200 Retrocession clients email hero image 640x200

Time to keep bonds on your radar

Saxo Be Invested

Saxo Bank

A few years ago, the unthinkable happened: interest rates dipped below zero worldwide. The 12-month Euribor – the money market benchmark rate for interbank term deposits (in euro) with a fixed maturity of up to one year – also dropped below zero in February 2016. This had a major impact. In this "new interest rate era," first-time home buyers saw their dream house – due to lower financing costs – come within financial reach sooner, and existing homeowners were able to refinance cheaply.

On the other hand, savers received little or no interest on savings accounts but instead had to pay interest (sometimes) on higher savings balances. Interest rates on bonds – both government and corporate – also fell sharply. That boosted the prices of existing bonds, but new loans offered ever-lower coupon rates. Low interest rates made the search for bonds that could add value to investment portfolios increasingly challenging.

How different the world looks today. Globally, interest rates rose sharply in a relatively short period of time. That led to sharp falls in bond prices in 2022. In addition, new loans are again offering coupon rates we haven't seen in years. This presents opportunities for investors. Before addressing where to find them, first a quick refresher on what bonds are and some important product features you need to know.

What are bonds?
Financial markets offer a variety of investment products. One of the largest categories is bonds. A bond is a loan issued by a company or government.  With a bond, you lend money for a certain amount of time in exchange for interest. It is a debt instrument, and, unlike stocks, you do not become a co-owner of the issuing institution. Bonds are tradable daily on stock exchanges and over the counter (OTC). There are several reasons for issuing bonds. In many cases, a company or government wants to raise capital to realise growth plans. Sometimes a loan is issued to pay off another loan.

Characteristics of bonds

The amount the government or company wants to raise with the loan is called the face value. This often involves large amounts, sometimes more than € 1,000,000,000. Therefore, this amount is cut into pieces of, say, € 1,000. These pieces are called denominations. Once in possession, you usually receive coupon interest on the denominations once a year, on the coupon date. Some bonds pay interest every six months or quarterly. Other bonds known as zero-coupon bonds, don’t pay interest but are offered at a discount.

The amount of coupon interest depends on the market interest rate, the term of the bond and the creditworthiness of the issuing institution. Typically, the quality of the issuing institution, the higher the rating, the higher the interest rate, the lower the creditworthiness of the issuer, and the longer the term of the loan, the higher the coupon rate.

There is an inverse relationship between interest rates and bond prices. If market interest rates rise, bond prices generally fall. If market interest rates fall, bond prices usually rise. Bond prices are also affected by the creditworthiness of the issuing institution. If the latter is in doubt, this can put considerable pressure on bond prices.

Why invest in bonds?
The main reason investors buy bonds is relative safety: if the issuing institution does not go bankrupt, you will get your money back at maturity. In addition, you will receive coupon interest at fixed intervals. This is nice if, for example, you want to draw income from your assets to supplement your pension. 

Another reason to invest in bonds is that they fluctuate less than stocks. They are a kind of shock absorber within a portfolio. 

Risk and diversification 
Risk and return go hand in hand. A company, as well as a government, may face a downturn. As a result, the price of the bond may drop significantly. In addition, the interest payment may possibly be skipped. And in the worst case, the issuer may go bankrupt. That makes repayment uncertain.

To reduce the risks, it is wise to include bonds from different sectors, or even geographies, in your portfolio. So, don’t   look only at bonds from banks and insurers, but also, for example, a bond from a brewery or tech company. Also, don’t  invest only in emerging market bonds, but diversify by investing in bonds from developed countries as well. You can also achieve this diversification by investing in a bond (mutual) fund or bond ETF.

Where to find bonds?
Within your account, you can easily find interesting bonds from all over the world. Just select ‘Markets’ and then ‘BO Bonds’.

Time to keep bonds on your radar
After this, you can choose Europe for example. Then a list of five corporate bonds appears on the left side, and five government bonds on the right side. By clicking on ‘See All” you’ll get a complete list.
Time to keep bonds on your radar 2
In addition to the name of the company or the government involved, we show the current bid and ask prices, as well as the coupon rate, coupon date, remaining maturity and effective yield. There is a wide choice to meet your risk profile.

In summary, with a bond, you lend money to a company or government in exchange for a coupon interest. The amount of coupon interest depends on the market interest rate, the term (time to maturity) of the bond and the creditworthiness of the issuer. The market price of a bond is expressed as a percentage and can fluctuate significantly. The purchase price of a bond determines your effective return. Since an issuer can go bankrupt, diversification is very important. Within your account, you can easily select from different types of bonds to suit your investment needs.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.