Capital News

SME Bonds: use with caution

Since at the moment the IPO market in Germany is extremely difficult for SMEs, many companies put out bonds. Especially private investors are lured by high interest rates. But these items are not free of risk. Cf. Processing, Siag Schaaf, BKN Biostrom, Solarwatt and Centrosolar: Just lately, some investors have been affected by defaults on German SME loans.

Although these are exceptions, as most medium-sized businesses benefit from an enormous confidence, most of the ratings of these companies indicate speculative level. Since corporate bonds are not protected by additional security, the investor bears the risk of default himself.