Tutorial: s Wohnbaubank structured bonds


What are s Wohnbaubank structured bonds?

The distinctive features of s Wohnbaubank structured bonds concern the maturity and the interest payments (coupons) of the security. The most common form of structured bonds is the target coupon bond which combines an initial period of fixed-rate interest payments with a subsequent phase of floating rates. The capital raised through s Wohnbaubank residential bonds is exclusively used for the construction of residential space in Austria. For private investors subject to Austrian tax the annual interest income of up to 4% is exempt from capital withholding tax irrespective of holding period and date of initial investment. This means that the yield after tax is higher than for ordinary bonds with the same rate of interest. In addition to the exemption from withholding tax, the fact that the initial investment is tax-deductible as special expense results in a higher yield as well.

How do s Wohnbaubank structured bonds work?

Maturity and investment payments (coupons) of s Wohnbaubank structured bonds are determined by a set of regulations. The holder of a target coupon bond receives fixed interest coupons in an initial fixed-rate period and subsequently moves on to floating rates. If the total amount of interest payments adds up to the target coupon, the bond is redeemed prematurely. The differential payment to the target coupon is made at the end of maturity at the latest, which is also when the bond is redeemed in full. An annual interest income of up to 4% from s Wohnbaubank structured bonds is exempt from capital withholding tax. In addition, the initial investment in the bonds is tax-deductible for private investors as special expense within the legally stipulated limits. The holding period required for the deduction is ten years.

Your benefits

An s Wohnbaubank structured bond offers you a long-term investment and the chance for above-average returns. You want to rely on a period with fixed interest income. You attach great importance to the solidity of the issuer and you want a guarantee for the total amount of interest to be paid out to you at the latest at the end of maturity. In addition, you want to maintain your chances of high coupons. The investment in s Wohnbaubank structured bonds allows you to combine the highest degree of safety for your capital with attractive interest rates and preferential tax treatment.

Your advantages

  • You can exploit tax breaks and you have the chance to achieve higher returns than for classic bonds.
  • You have the chance to premature redemption of the bond should the target coupon be reached prior to maturity.
  • At the end of maturity you are guaranteed to receive the agreed total amount.
  • Your capital is guaranteed at the end of maturity

Details you should be aware of

  • Between issue date and maturity, price fluctuations are possible, which means that the sale of the bond prior to maturity may result in a loss.
  • The 100% redemption rate only applies to premature redemption or to the end of maturity, respectively.
  • Coupon payments may be temporarily omitted in certain years.
  • The legal basis for special tax treatment may change during the term of the bond.

How do s Wohnbaubank structured bonds react to...

… rising interest rates?
After the fixed-rate period, the interest payments (coupons) of s Wohnbaubank structured bonds are determined by their regulatory framework.

… stable interest rates?
After the fixed-rate period, the interest payments (coupons) of s Wohnbaubank structured bonds are determined by their regulatory framework.

… falling interest rates?
After the fixed-rate period, the interest payments (coupons) of s Wohnbaubank structured bonds are determined by their regulatory framework.