On 1 January 20X1, entity A issued at par bonds with total face value of CU 500 000, annual coupon of 4% of the nominal amount (CU 500 000) at the end of each year and 5-years maturity. These conditions are consistent with market rates for bonds with similar characteristics. At the end of 5-years maturity repayment is 530 000. The bonds are issued in a private placement and are BB-rated. The bonds are already designated to be measured at cost.

The CEO read in an article that IFRS 9 requires the recognition of an impairment loss for financial instruments. Therefore, he asked whether it is necessary to recognize an impairment loss for the bonds. Please provide him with the relevant information.