LSE throws doors open to retail bonds
Filed under: Company, Personal Finance, Savings and Accounts, Banking , Retail
Have you given up on interest rates? Well, how does rates sound of more than 5%?
The London Stock Exchange (LSE) has launched a new retail bond market giving investors the chance to buy and trade bonds.
Up to 10 different bonds will be offered from a range of well-known brands including Tesco, BT, National Grid and GlaxoSmithKline. Investors can trade through private client brokers who will place orders on their behalf.
Safe returns?
Traditionally access to corporate debt products were out of reach to modest investors. But the LSE has thrown open its doors to the masses. And with interest rates utterly decimated, it could prove a very welcome option for many savers.The scheme goes under the rather unglamorous title of Retail Bond Platform. But who wants glamour from a safe return. Bank of Scotland yesterday issued a 10-year bond paying 5.1% with a threshold of just £100.
But would you want to invest with RBS? That will be debatable for some investors. But it's an interesting offer with a very low access-to-entry threshold.
Equities, coupons and cash
The move may well spur other investment banks into action. Interestingly, access to retail bonds is quite common in Europe.Why has this not been offered before? Good question. Traditionally the Brit investment retail market has relied on equities or cash deposits. Very little middle ground.
But with the increased desire for simplification and transparency, a basic interest-paying coupon could be a hit. However, investors will need to be clear that though the interest rate is fixed, the value of the bond itself could well have moved when it expires.
It's not quite the NS&I corporate equivalent yet.
Links (opens in new window)
RBS kicks off LSE's new retail bond platform - Reuters
New products set for LSE bond platform
Lord Myners heralds UK retail bond platform - Telegraph
