Gulf Bank actively participates in the primary as well as secondary markets for government bonds and corporate debentures. The two major types of bonds are:
- The government issues those that are related to country ratings, taking into account both economic and political factors in matter of stability and development.
- Corporate bonds that are debt instruments rated according to the company?s financial situation. The Kuwait market, unlike past records, is now showing significant growth in this area. We can expect an increase in new issues.
Government issues in the Kuwait Market are broadly classified into 2 types:
- CBK Bonds
- Treasury bonds for maturities from 1 year and above
There are 2 markets for trading bonds:
- Primary, issued at par (price 100) with fixed coupon
- Secondary, bought & sold according to the market conditions, the price would change, higher (at premium), or lower (at discount), so affecting the yield or the real return.
- Interest rate expectations are major factors affecting bond prices. So if rates move higher, the price of the bond will be lower, and vice versa.
- The Central Bank of Kuwait issues bonds and bills according to maturities on a regular basis.
- Individuals interested in buying either bills or bonds need to deposit their money in a Gulf Bank account.
- For government bonds, applications should be submitted on Sunday, while application for government bills should be submitted on Monday. Gulf Bank charges a nominal fee for bonds or bill applications.
- The Bond market is suitable for investors that are looking to enhance the returns of their portfolios through the use of low risk tools.
- Traders are able to buy and sell different bond issues according to market opportunities.