Retail bonds boom as ICAP shuts its £50m issue ahead of schedule

BROKER ICAP yesterday closed its £50m retail bond issue earlier than expected following a strong response from investors.

“ICAP has met sufficient demand for the bond,” a spokesman said. They declined to comment on the likelihood of future issues.

The bond offered a 5.5 per cent return over a six year period and subscribers could buy £100 units, with a minimum subscription of £1,000. It was only launched last Thursday and had been due to close on 24 July.

Retail bonds are a new market that has proved to be a hit with investors seeking a guaranteed rate of return. Initially focusing on well-known firms such as Tesco Bank, National Grid and Severn Trent, they are set to be offered by firms outside the FTSE 100.

Unlike bank accounts the bonds are not covered by the Financial Services Compensation Scheme so subscribers could lose their capital if a firm goes bankrupt.

However most retail bonds are traded on the London Stock Exchange, giving subscribers the chance to claw back some of their investment if they wish to exit early.