Czech Republic offers new short-term Flexi Bonds

The Czech Ministry of Finance is launching a new issuance of Republic Bonds, specifically offering the short-term Flexi Bond. The subscription period runs from Monday, August 24, to Sunday, October 4.

The Flexi Bond features a three-month maturity and an annual interest rate of 3.75 percent. This rate is tied to the Czech National Bank’s two-week repo rate; if the central bank raises the rate during the subscription period, the bond yield will increase accordingly. Conversely, if the rate is lowered, the yield remains at 3.75 percent.

This bond offers a potential advantage over savings accounts because the yield is exempt from the 15 percent income tax. To match a 3.75 percent net yield, a standard savings account would need to offer approximately 4.41 percent.

Investors can order bonds electronically or at ČSOB branches. There is a maximum investment limit of three million CZK per person. For those who participated in the first issuance, funds and interest may be automatically reinvested into this second issuance unless a payout is requested by October 9.