View the article online at http://citywire.co.uk/money/article/a615268
Retail bond market hots up with new 6.25% deal
Intermediate Capital Group (ICG) has launched a new retail bond offering investors a fixed annual rate of 6.25% until 2020.
Specialist lender ICG has launched a new retail bond paying a fixed annual rate of 6.25%.
The news comes as property investment company CLS reveals it has had to close its new retail bond issue seven days early because of oversubscription.
Terms and conditions
Intermediate Capital Group (ICG) will pay interest twice a year on 19 March and 19 September until the eight-year sterling bond matures in September 2020. The bond can also be held in an ISA (individual savings account) or Sipp (self-invested personal pension), where the return is tax-free.
Investors are required to make a minimum investment of £2,000, but can buy bonds in multiples of £100 thereafter. Once bought investors will be able to trade the bonds on the London Stock Exchange’s Order Book for Retail Bonds (ORB).
The deadline for retail investors is 12 September but the issue could be closed early – as we saw with CLS’s new bond – depending on demand.
This is the second retail bond launched by ICG. At the end of last year it offered investors the chance to earn 7% on a seven-year bond maturing in 2018.
Philip Keller, managing director and chief financial officer of ICG, said the first retail bond delivered a ‘positive performance’ and, given the company’s balance sheet, believes this bond provides ‘an excellent opportunity’ for retail investors.
ICG is looking to raise £50 million from the launch, but could take a little more, said Henrietta Podd of Canaccord Genuity, which has been appointed as lead manager of the bond.
A look at the risks
Investors should, however, bear in mind the risk associated with investing in ICG’s retail bond.
ICG specialises in arranging finance for medium-sized companies, providing direct loans and managing external funds. This is not without risk, and leaves the company very exposed in the event of a stock market crash. ICG also does the bulk of its business in the eurozone, so could be adversely affected if there were a break-up of the eurozone.
However, ICG has been in this business for over two decades, and they know their game, running a diversified portfolio with a strong focus on recovery of assets, said Mark Glowrey of Fixed Income Investor, which specialises in analysing bonds.
The bond is rated BBB- by credit rating agencies Standard & Poor's and Fitch – the investment grade above junk.
In the event that something does go wrong investors should remember that retail bonds are not covered by the Financial Services Compensation Scheme (FSCS).
News sponsored by:
Making the most out of Europe's potential means seeing things differently. Learn more about how BlackRock's focused approach to investing in Europe helps investors unlock the continent's vast potential.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
More from us
What others are saying
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.
by Daniel Grote on Apr 26, 2017 at 11:17