Harlequin FC Bond Help Please?

undrop79

Morning all, I'm after a bit of advice.

I usually put all of my savings in ISAs but have received an email from the premiership rugby team that I support (Harlequins Rugby Club) to say that they are introducing the Harlequin FC Bond which they also referred to as a "Corporate Mini-Bond" to help them raise £7.5 million for the future development of the club. The bond offers a rate of 5.5% (gross) per annum (paid cash semi-annually) over an initial 5 year fixed term.

I like the idea of my savings supporting my club but I have no experience or knowledge when it comes to bonds or corporate mini-bonds.

I understand that this would be an unsecured investment which I'm assuming means that if the club goes belly up within the 5 year term I could lose the investment (?) however the 5.5% rate of interest is also... interesting?

What are your thoughts on this and do you think it's worth a punt over my ISA investment this year?

Any help or advice is much appreciated as always...

dunstonh

I understand that this would be an unsecured investment which I'm assuming means that if the club goes belly up within the 5 year term I could lose the investment (?) however the 5.5% rate of interest is also... interesting?

5.5% is not at all appealing on a 100% loss risk investment with no FSCS protection.

If you are willing to accept investments then why not stick to mainstream regulated investments?

bowlhead99

It's very often possible to get higher interest rates than you get from banks when you lend to companies or other types of organisations where you could lose 100% of your capital instead of having it 100% protected by a bank compensation scheme.

Whether the risks of doing that are worth taking, for the small extra reward you could potentially get compared to high street bank current accounts or regular saver accounts at 3%,4%,5% or 6%, only you can say. Even "real" corporate bonds have an edge over "mini" bonds as they have a ready market and can go in an ISA

Many people in sports bet with with their heart rather than their heads, I expect Glasgow Rangers fans didn't think they'd go bust because they kept getting in the top two in the premiership every year. Similarly shoppers at HMV, Blockbuster or Woolworths probably thought it was a decent product so might have been surprised that investors walked away with nothing.

undrop79

I think that part of the appeal is that it means supporting my club by helping them to get a cash-injection which should improve their facilities and buying power and which could ultimately mean the club does better.

Do you have a recommendation on regulated and secured investments that offer similar rates of interest?

undrop79

Makes sense thanks bowlhead99. So the main issue with this corporate mini-bond is the risk of losing the investment.

I would still like to have a stake in it but given your advice, might just invest the minimum amount instead of using everything that I was planning to invest this year that was originally ear-marked for an ISA

dunstonh

I think that part of the appeal is that it means supporting my club by helping them to get a cash-injection which should improve their facilities and buying power and which could ultimately mean the club does better.

And you are willing to risk 100% loss of capital for that?

Do you have a recommendation on regulated and secured investments that offer similar rates of interest?

It is not secure. So, why does the alterantive have to be secure when this bond does not?

There are plenty of low risk investments with better yields with more diversification and FSCS protection

taylornj

Wasps - did a Corporate bond, think they have something to do with rugby. 7yr term listed 14 May 2015, 6.5%pa.

http://www.londonstockexchange.com/exchange/prices-and-markets/retail-bonds/company-summary/XS1221940510ZZGBPUKCP.html?lang=en

You can put this in an ISA or SIPP.

This is traded, so can be sold on the market for a little over £104 for each £100 bond bought.

The Harlequins 5.5% rate is on the low side. Yield on the Wasps bond is close to 5.5% now.

undrop79

dunstonh wrote: »

And you are willing to risk 100% loss of capital for that?

Probably... yes

dunstonh wrote: »

It is not secure. So, why does the alterantive have to be secure when this bond does not?

Because I am also looking at this as a supporter of my club, not just from an investment point of view. If the club I support will benefit from the investment and I benefit from the interest, then I feel it's a win win. I wouldn't have any affiliation from an alternative bond so it would be all about the best deal.

dunstonh wrote: »

There are plenty of low risk investments with better yields with more diversification and FSCS protection

Are these listed on the MSE website somewhere? If not, any chance you could drop me a couple of links please?

Thanks

dunstonh

Are these listed on the MSE website somewhere? If not, any chance you could drop me a couple of links please?

They are not. Investments carry a higher level of regulatory requirements to be met than savings. This site does not go into investments (it actually has a poor record on occasions it has done so in the past. So, mostly avoids it now).

I cant give you any links as I am a regulated individual and posting on here, even in a relatively anonymous form, would be a breach of regulation. Other non-regulated individuals reading don't have to worry about that and may chip in.

undrop79

dunstonh wrote: »

They are not. Investments carry a higher level of regulatory requirements to be met than savings. This site does not go into investments (it actually has a poor record on occasions it has done so in the past. So, mostly avoids it now).

I cant give you any links as I am a regulated individual and posting on here, even in a relatively anonymous form, would be a breach of regulation. Other non-regulated individuals reading don't have to worry about that and may chip in.

Understood. Many thanks for your input and advice

undrop79

taylornj wrote: »

Wasps - did a Corporate bond, think they have something to do with rugby. 7yr term listed 14 May 2015, 6.5%pa.

Yes, if I remember rightly this was when they were looking to buy their own stadium when they moved up to Coventry. They were in a much worse position back then to what Harlequins are in, pretty much on the verge of bankruptcy which might reflect on the better rate maybe? If I were a betting man I would feel more secure betting on Harlequins financial stability compared to Wasps in 2015 but anything could happen so there is still a risk.

taylornj wrote: »

The Harlequins 5.5% rate is on the low side. Yield on the Wasps bond is close to 5.5% now.

Ok thanks. In which case I think I will stick with putting the minimum amount in on the Harlequins 5.5% bond and will stick to putting the rest in savings.

Thanks for your help