DIY Investor Magazine
/
2015 Issue
26
RETAIL BONDS:
ALLOWING RETAIL INVESTORS TO BUILD
& MANAGE THEIR OWN PORTFOLIOS
In February 2010, the London Stock Exchange
launched its new electronic bond market for retail
investors, the Order Book for Retail Bonds (“ORB”)
The background to the reason behind the launch was
two-fold; increasing private investor focus on fixed
income, and corporate funding needs. In reality, both
were a consequence of the Global Financial Crisis;
historical low interest rates led investors to chase
yield, and the deterioration of bank balance sheets
lead to them stopping lending, particularly to “smaller”
companies.
One of the Key aims of ORB was to develop an
efficient, transparent secondary market in bonds for
UK investors and to establish a primary market for
distribution of dedicated retail bonds, opening up new
sources of capital for companies seeking to diversify
their funding
In addition to offering more than 180 retail-size
bonds on the platform, ORB is now established as
an alternative source of funds for a wide range of
corporates. There are now in excess of 50 ORB-
dedicated new issues and 6 taps of existing ORB issues
that have raised more than £4.75 billion for 28 different
issuers.
ORB has successfully enabled:
•
A diversified investor base - increasingly strong
demand for retail bonds from retail brokers, wealth
managers and private investors
•
An alternative source of funding for issuers
•
Flexibility - the size of a retail bond can be tailored
to meet issuers’ particular needs; issues have
ranged from £20 million to £300million
•
“Simple” structures for retail investors to assess
However ORB issuance has diminished overtime:
Year
Amount
raised
(£m)
Number
of Issues
Number
of new
Issuers
2015
(yr.-to-date)
262
4
2
2014
476
5
4
2013
810
8
7
2012
1, 400
15
12
2011
1,250
11
5
2010
240
6
3
The key columns here are the number of Issues and the
number of new Issuers coming to market each year.
Philip Gilbert
Beaufort Securities
