Interactive Investor

Property firm tempts income investors with 5.25% retail bond

27th July 2017 10:08

Kyle Caldwell from interactive investor

Over the past five years or so a swathe of companies have appealed directly to income-starved savers and launched retail bonds. Juicy yields, some of which have been in excess of 7%, have been on the table.

But in more recent times the income on offer has started to become less generous, perhaps a reflection that the current low-yielding and low-interest world is rumbling on much longer than anyone ever anticipated.

A new retail bond launch by LendInvest, however, has bucked the trend, offering interest of 5.25%, which will be paid to investors twice a year. Not since April 2016 has a retail bond offered a coupon of over 5%.

The bond has a five-year term; as is common with other retail bond issues, small investors are being targeted, with the minimum investment standing at £2,000. The offer, which is currently open and available to buy on Interactive Investor, will close at midday on 4 August.

LendInvest lends money to landlords to buy property, mainly in London, on short- to medium-term loans of one to three years, and also for bridging finance products lasting between one and 12 months.

Should I invest?

Investing in bonds requires just as much scrutiny of company balance sheets as investing in shares. Three things to examine are cash flow, debts and profits.

Those who put money into any retail bond are essentially taking a view on whether the issuer will grow as hoped, in order to pay the interest payments. If the issuer fails, investors face the prospect of losing all their capital.

Another thing to bear in mind is that neither retail nor mini-bonds are covered by the Financial Services Compensation Scheme. Mini-bonds differ from retail bonds, as they cannot be traded so therefore must be held to maturity.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise.The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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    Income Investor