9.01% fixed rate 5 year high yield bond - too good to be true?

Malthusian

dale_cotterill wrote: »

A sleeve sponsor on West Ham's 2018/19 shirt as well.

Not sure either of them benefit from that association

Not quite as 'too good to be true' as some of the stuff we usually get on here. They seem to be at least attempting a legitimate business model than going for all out fraud.

So do pretty much all of the "too good to be true" unregulated investments we see here.

Investing in wind farms, SME loans, property development, storage pods, payday loans to the Sioux Indians, or lately cryptocurrency mining - pretty much every unregulated bond offering returns of 8-12% per annum has some sort of legitimate business model behind it. And you can almost guarantee that these activities are being carried out. To some extent.

The main risk is not that the whole thing is a scam and all the money disappears (possible but rare). The risk is that the legitimate business is unable to generate sufficient returns to cover the scheme's costs and investor interest. Especially after it is done paying commission, other marketing costs and other overheads.

You are basically giving money to a company who lends money to the companies who lends money to those who generally are unable to get lending through the traditional source.

To be very pedantic, you are giving money to a company who lends all of it to River Bloom Limited, a company domiciled in Cyprus. What River Bloom does with the money is effectively a black box as even Basset & Gold's own auditors haven't seen River Bloom's accounts (page 9 of the PDF).

Reaper

Malthusian wrote: »

To be very pedantic, you are giving money to a company who lends all of it to River Bloom Limited, a company domiciled in Cyprus. What River Bloom does with the money is effectively a black box as even Basset & Gold's own auditors haven't seen River Bloom's accounts (page 9 of the PDF).

Nice link, but to be even more pedantic it's page 7

Malthusian

Reaper wrote: »

Nice link, but to be even more pedantic it's page 7

Page 7 of the accounts, page 9 of the PDF.

AnotherJoe

So this shows how worthless auditors reports are. Or this one anyway. Im amazed such a pathetic statement counts as a report.,
It might as well have said "we think this is OK because the directors who are paying us to do this report told us it was OK" and not bothered looking into any detail

Reaper

AnotherJoe wrote: »

So this shows how worthless auditors reports are. Or this one anyway. Im amazed such a pathetic statement counts as a report.,
It might as well have said "we think this is OK because the directors who are paying us to do this report told us it was OK" and not bothered looking into any detail

Not quite. It is listed as an "Emphasis of matter". That's equivalent to the auditors drawing a big arrow pointing to it in the report. You should beware any such entries in the report and consider hard whether you still wish to invest.

There is another higher priority called a "Qualification". That means while most of the accounts are OK this particular item they are unable to sign off on, which might be anything from not following accounting standards properly through to fraud.

Then there is the very rare final resort of refusing to sign off the accounts at all.