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<h2>What are Capital Indexed Bonds?</h2>
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<p>Capital Indexed Bonds (CIBs) are a type of bond whose capital value and interest repayments are adjusted periodically for movements in the Consumer Price Index (CPI). Interest is usually paid at a fixed rate on the adjusted face value. At maturity, investors receive the adjusted face value of the bond plus the final coupon based on the adjusted face value.</p>
<h3>Advantages</h3>
<ul>
<li><strong>Inflation Risk –</strong> Protection against inflation</li>
<li><strong>Trade-able </strong></li>
<li><strong>Income stream –</strong> Stream of regular coupon payments and the return of the principal on maturity.</li>
</ul>
<h3>Disadvantages</h3>
<ul>
<li><strong>Inflation Risk – </strong>If inflation is negative, the value of the bond will be lower than what it was purchased for.</li>
</ul>
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