New Retail Bond Issue paying 12%

Albermarle

Extract From the DT
Investors are being offered an inflation-busting 12pc annual interest if they lend money to a finance company for five years via a “retail bond”
The fixed-rate bond, which will be traded on the London stock market like a share, is being offered by International Personal Finance, a listed “subprime” lender that operates largely in eastern Europe
Although retail bonds are considered safer than “mini-bonds”, on which savers lost millions of pounds through high-profile scandals such as London Capital & Finance, they are far from risk free

The offer closes on December 6. Several stockbrokers, including Hargreaves Lansdown, AJ Bell and Interactive Investor, are taking part in the offer.

The new bonds mark a return to life for the retail bond market, where there had been only one new issue since 2018

jimexbox

I read the article too. I thought avoid at all costs unless your risk level is off the scale. 

Linton

A bond paying 12% must be very far from risk free.  Otherwise the issuers would have no problem getting the money they need at a lower cost.  I thin we should be wary about advertising bonds offering such rates as those people most likely to buy them are probably those with least understanding of the risks.

25_Years_On

Who are the DT? I can find a Japanese band and a cycle parts manufacturer.

jimjames

25_Years_On said:

Who are the DT? I can find a Japanese band and a cycle parts manufacturer.

I assume Daily Telegraph newspaper

eskbanker

jimjames said:

25_Years_On said:

Who are the DT? I can find a Japanese band and a cycle parts manufacturer.

I assume Daily Telegraph newspaper

Seems a reasonable assumption, given the two links to the Telegraph website within the post!

Albermarle

I thin we should be wary about advertising bonds offering such rates as those people most likely to buy them are probably those with least understanding of the risks.

It is still an interesting development, especially as some respected brokers will apparently be promoting it.
Although I am assuming that the responding posts on here, will be negative enough to put anyone off. 

wmb194

International Personal Finance (IPF) is a FTSE small cap company, market cap £167m, LSE:IPF. It was previously the international arm of Provident Financial (LSE:PFG) and was spun out some years ago. So at least on the plus side this isn't an early stage, fly by night business.

12% is an obvious red flag but you really need to pay attention to the risks with this one - there will be a section in the prospectus about it.

https://www.londonstockexchange.com/stock/IPF/international-personal-finance-plc/company-page

Cus

Sounds like a new bond issue from a very lowly rated junk bond issuer.  

wmb194

Cus said:

Sounds like a new bond issue from a very lowly rated junk bond issuer.  

Yup, a Google finds an October 2022 rating from Fitch of BB- and in November 2022 an "expected rating" of BB- for this 12% issue.

https://www.fitchratings.com/research/non-bank-financial-institutions/fitch-rates-international-personal-finance-proposed-senior-unsecured-notes-bb-exp-15-11-2022

https://www.fitchratings.com/entity/international-personal-finance-plc-88846461

https://www.fitchratings.com/research/non-bank-financial-institutions/fitch-affirms-international-personal-finance-at-bb-outlook-stable-06-10-2022

25_Years_On

Oh The T. I would have got that straight away.