RE: Greenberry31 May 2017 01:19
"The bond will carry an 8% coupon, a 10% fee and will be issued at 80% of par" So, every year ECHO will pay 8% interest to Greenberry (€160,000), usually every 6 months (€80,000). They have already paid a 10% fee to Greenberry (€2,000,000) and it was issued at 80% of par ie €16,000,000. If the value of the bond decreases, similar to the price of oil or gold, the actual percentage return effectively increases as the €160,000 is paid by ECHO regardless, For example, if the valuation of the bond falls to €10,000,000 ECHO still pay €160,000 which equates to a 16% interest rate. It is these flutuations which makes bonds tradable. Luxembourg is the market of choice for dealing.
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