In 2025 the market of bonds is enriched with new proposals for savers. Among the latest emissions, the Callable bonds by Deutsche Bank, listed on Borsa Italiana – Eurotlx starting from March 6, 2025.
These are two bonds also intended for retail investors: one in US dollars (USD) and one in euros (EUR). Both offer one fixed coupon The first year and a reverse variable yield in the following years, linked to the trend of reference rates Sofr and Euribor 3 months. With ten -year deadline and full reimbursement of the capital, these tools aim to attract those looking for investment opportunities in a context of variable rates and evolving markets.
New Callable Bonds: what they are and how they work
In 2025 there are several investment options. Among the most recent, by issue, we find those of Deutsche Bank, which has expanded its offer with two new Callable bonds. These tools are designed for those looking for interesting yields in particular in a rates descent scenario.
But what does “Callable” mean? Callable bonds, or Required bondsare debt securities that give the broadcaster of the right to reimburse capital in advancestarting from a predetermined date. In the case of the new Deutsche Bank emissions, this possibility of recall begins from the second year, on the occasion of the payment of the annual coupons.
For the investor, this means that the actual duration of the investment can be lower than the natural expiry of the title. If the bank decides to recall the obligation, the investor receives the 100% of the nominal capitalin addition to the last coupon matured.
Attention:
The reimbursement decision is at the discretion of the issuer and is usually exercised if market rates descend, allowing the bank to refinance the debt with more favorable conditions.
Duration and deadlines
Callable bonds, for example like those that can be purchased by Deutsche Bank, have one decennial durationwith deadline set at 6 March 2035. This means that, in the absence of an early appeal by the issuer, the investor will receive the full reimbursement of the nominal capital on that date.
But as required by the Callable mechanism, the bank has the right to reimburse the obligation in advance. This option can be exercised every year, starting from March 6, 2026, in correspondence with the payment dates of the coupons.
If the bank decides to exercise the call, the investor still receives 100% of the nominal amount, together with the last coupon accrued.
From an operational point of view, the actual duration investment may vary:
- up to 10 years if the call is not exercised;
- shorter in case of early appeal, according to the decisions of the issuer and the progress of market rates.
For this reason, those who choose these obligations must consider not only the natural expiry, but also the possibility that the title comes refunded before the term.
Fixed coupons and reverse variable yield
Continuing with the example, the new Callable bonds provide for a yield mechanism on two levels: one fixed coupon guaranteed the first year and one Reverse variable coupon from the second year until the expiry (or the early appeal by the issuer).
In the first year of investment, the obligations offer a gross fixed yield equal to:
- 9.25% for the obligation in USD;
- 5.75% for the obligation in EUR.
This coupon is paid to the first payment date, set for the March 6, 2026regardless of the progress of market interest rates.
From the second year until the deadline, the coupons are variable and depend on the difference between the initial fixed rate and the reference rate:
- Sofr for the obligation in USD;
- Euribor 3 months for the obligation in EUR.
From the 2nd year to the 10th year, for Callable in USD bonds:
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From the 2nd year to the 10th year, for Callable in EUR bonds:
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Pros and cons to be evaluated before investing
Investing in bonds Callable involves a series of advantages and considerations to be carefully evaluated, according to its own risk profile and financial objectives.
Pros:
- High fixed coupon the first year – 9.25% in USD and 5.75% in EUR, ensuring a certain initial return;
- capital protection – full reimbursement of the nominal capital upon expiry or in the event of early appeal;
- Opportunities in sets of stable or decreasing rates – the inverse variable structure of the coupons rewards contexts of decreasing rates;
- Accessibility – Titles listed on Borsa Italiana – Eurotlx, also negotiable on the secondary market.
Against:
- early refund at the discretion of the issuer – reduces the predictability of the actual duration of the investment;
- risk of decreasing return – if interest rates increase, variable coupons can reduce up to zero;
- Exchange risk (for the USD version) – the investor in euros is exposed to the fluctuations of the US dollar;
- Reinvestment scenarios – In case of early appeal, capital could be reinvested at less advantageous conditions.
These bonds can represent an interesting solution for diversify the walletin particular for those looking for initial performance and capital protection, but it is essential to evaluate their time horizon and tolerance to the risks related to the trend of market rates.
