What is a bond?
Investing with Enerfip means choosing a project to direct your savings towards. Each project is different, and we offer three types of unlisted financial securities.
- You can invest in straight bonds, convertible bonds, and ordinary shares.
- Straight bonds have a fixed interest rate, a fixed repayment frequency, and a fixed maturity date.
- Convertible bonds also have a fixed interest rate, a fixed repayment frequency, and a fixed maturity date, and can only be converted into shares at maturity in the event of default or late payment.
Definition
In the financial market, a bond is a piece of debt issued by a company. When a company needs financing (or equity to fund a project), the required amounts may necessitate the involvement of numerous creditors. You can become one of these creditors by "buying" a bond, that is, a portion of this debt. In addition to the principal, which will be repaid to you at a fixed maturity date, the issuer agrees to pay you periodic interest at a fixed rate.
Bond vocabulary
- The issue price is the price of the bond at the time of its issuance.
- The "face value" of a bond is its purchase price.
- The life of a bond is its maturity date. This also corresponds to the holding period.
- The interest rate that pays you is called a coupon.
What are the different types of obligations?
On Enerfip, there are two types of bonds.
- Simple bonds (SO): The coupon amount and interest payment frequency are fixed at the time of issuance. Therefore, the return is constant until the bond matures.
- Convertible bonds (COBs): The coupon amount and interest payment frequency are fixed at the time of issuance. Therefore, the return is constant until the bond matures. These bonds can be exchanged for shares of the issuing company in the event of late or default payments.
What are the risks of a bond?
The main risk for the lender, i.e., the investor, is the risk of not being repaid the loan in the event of the borrower's bankruptcy or other systemic problems.
The projects currently raising funds on Enerfip have been rigorously analyzed by our team and meet all our selection criteria, encompassing technical, economic, and administrative aspects, as well as environmental and social considerations.
These projects have been designed to limit investor risk and guarantee the most stable returns possible. Each project also offers specific guarantees within its financial structure.
The Enerfip team has extensive experience in the renewable energy sector, enabling them to verify that the technical studies have been conducted rigorously and in accordance with best practices. Furthermore, the projects are covered by insurance (business interruption, equipment breakdown, ten-year warranty, etc.), particularly against natural disasters. Nevertheless, like any business venture, these projects carry risks, and returns and capital cannot be fully guaranteed. In particular, we draw your attention to the specific risks involved in investing in unlisted companies:
- Risk of total or partial loss of invested capital
- Risk of illiquidity: the resale of securities is not guaranteed and may be uncertain, or even impossible in some cases. However, the Enerdeal platform allows you to offer some of your securities for sale on the secondary market.
- The return on investment depends on the success of the funded project.
In the case of bond investments, the placement of an issuer into insolvency proceedings, particularly receivership or liquidation, may lead to bond maturities not being repaid.
How to sell your bonds?
Bonds are transferable securities. You can therefore sell them provided you find a buyer when you wish to sell. The Enerdeal platform, accessible through your savings account, allows you to offer some of your securities for sale to members of the Enerfip community. Please note that bonds with geographical restrictions cannot be offered on Enerdeal.