BONDS AND MINI BONDS EXPLAINED
Listed Retail Bonds and Mini Unregulated Bonds are special types of Corporate Bonds. Both are means by which companies borrow money from investors in return for regular interest payments. On a predetermined maturity date, the bond is redeemed and the investor gets back the original investment in full. Retail Listed Bonds are listed on the London Stock Exchange (LSE) and can be traded – In other words, you can sell before the Bonds mature. Retail Listed Bonds must also produce Financial Statements twice a year, enabling Investors to monitor the progress.
How secure is a Listed Retail Bond for an Investor?
Investors are able to research all recent accounts and reports on the company thoroughly and check the company’s cash flow is healthy and consistent before and during their investment. They are also able to look at the company’s interest cover – which is the ratio that shows how easily a company will be able to meet interest repayments on its debt. Before listing, the Bonds are scrutinised by a number of regulatory authorities to screen against holes in the company’s balance sheets. No Corporate Bond is completely safe because any company has some risk of running out of money. If an issuer goes bust, there is no protection from the government scheme that protects bank customers, the Financial Services Compensation Scheme (FSCS).
Mini Unregulated Bonds
In many ways, Mini-Bonds are similar to Retail Listed Bonds, they are still a way for Private Investors to lend money to a company for a set period in return for interest. The key difference is that Mini-Bonds are not traded on the Stock Market and as a result they are subject to much looser regulation.