England 8/11/2012 – More UK retailers than ever are using retail bonds to help them with cash flow
Up until fairly recently if retailers wanted to raise funds they did so by borrowing from the banks, or by selling shares. However, the banks are increasingly reluctant to lend and many investors are no longer interested in buying large quantities of shares. Therefore, many UK retailers are turning to retail bonds to raise the money they need for their businesses.
The London Stock Exchange set up a book for retail bonds early in 2010. At that stage, the market was worth around £100 million. Today, it is worth a whopping £1.2 billion. This is phenomenal growth and it looks like retailers will continue to raise money this way. The deals appear to be getting bigger and bigger.
There are all kinds of people investing from private investors to pension funds and Mutuals. The main reason this new form of investment is so popular is that the alternatives are continuing to underperform. Many investors believe that this situation will continue for many years and they see retail bonds as a good long-term investment.
For many investors it is also a way of spreading risk. Increasingly, UK investors are looking for ways to diversify their portfolios. The fact that it is really easy to invest in these bonds is attracting lots of private investors.
The popularity of retail bonds is good news for taxpayers
For the government the fact that so many people are investing in retail bonds is good news. The more money businesses can raise this way, the better. Currently many banks are lending with what is effectively a taxpayer guarantee. All lending carried out on the retail bond market is completely risk-free to the taxpayer.
Firms like the Retail Bond Expert are making it easier for private investors to get involved in the market. This too is good news for the government. The more of their citizens who can make money through their investments the better it is for them. Successful retail bond investments are giving many UK citizens spare money to spend in a struggling economy.
Retail Bond Expert