The industrial bond is a bond that can be issued by negotiable companies. With it it is possible to cover a high capital requirement of companies in the long term, usually over 10 to 25 years, because a large number of investors provide funds in small amounts.
The entire loan amount is broken down into small parts. E.g. to 100 €, 500 €, 1,000 €, 5,000 € or 10,000 €. They are called partial bonds and securitize claims, ie the claim is tied to the paper. With them, the borrower undertakes in particular to pay the interest, which is usually due semi-annually in arrears, and to repay the capital granted.
The company can issue the industrial bond itself. Usually, however, it is carried out by a bank consortium as an external mission. The issue price of the bond, like the repayment amount, does not have to match its nominal value. The repayment of the industrial bond can take place at a uniform date, but usually takes place after a grace period (e.g. 5 years) in installments that can remain the same or increase over time.
Because of the long term, it may be necessary for the company to adjust the interest rate printed on the jacket of each bond over time. This adjustment is called conversion and can be made up or down.
Cost of capital accrue for the preparation and launch, provision of collateral, listing on the stock exchange and as interest.