Underlying reference. The performance of the bond depended on changes in 3-month EURIBOR rate. Regardless of the change in the EURIBOR rate, investors were guaranteed a minimum return of at least 0.4% per annum. Depending on changes in the 3-month EURIBOR, the return could fluctuate up to 4.0% per year.

Index-linked bond performance review

The bond was structured to benefit from gradual economic recovery in the Eurozone. The bet was that the economy grows at a moderate pace, inflation reaches the European Central Bank (ECB) target and the central bank raises rates in response. Economic growth, however, remained sluggish and unemployment stayed at elevated levels. Thus, lacking wage pressures and following the decline of oil and other commodity prices inflation stayed stubbornly low. So the ECB lowered the interest rate into the negative territory and introduced the bond buying program to stimulate the economy. As a result, the interest rate was kept lower for longer than expected. Bondholders, however, benefited from the guaranteed floor rate earning higher than market interest rate.

Index-linked bond performance

Further investments

We recommend considering reinvestment of the nominal value and return on your investment. To get a recommendation on the possible investment options that are suitable for your investment goals, please contact your personal investment advisor. In order to get more information on all current investment solutions, please visit Luminor homepage luminor.lv.