Minister of State applauds success of retail bond market
- LSEG celebrates one year anniversary of ORB platform
- New bond from Tesco admitted to trading on same day, oversubscribed and raising £125m
Lord Green of Hurstpierpoint, the Minister of State for Trade and Investment, has spoken of the benefits of the London Stock Exchange’s Order book for Retail Bonds (ORB) in relation to private sector recovery at an event marking the first anniversary of the platform’s launch.
The ORB, launched in February 2010, in response to strong private investor demand for greater access to fixed income, is making trading bonds far more accessible to the retail investor community and aims to ensure trading bonds is as simple as trading shares.
Coinciding with the one year anniversary celebrations, a new bond issued by Tesco Bank was admitted to trading on the market on Friday 25 February, having raised £125 million. It was the first to be made available for ‘When-Issued-Dealing’, is tradable in denominations of £100 and offers an annual coupon of 5.2%.
Speaking ahead of the event Lord Green of Hurstpierpoint, Minister of State for Trade and Investment, said:
"The London Stock Exchange's retail bond market has given British companies a welcome new way of funding their ambitions. At the same time it has given savers a new way to invest in UK firms. I congratulate the Exchange on the progress it has made during its first twelve months, and I look forward to supporting its development in the years ahead."
Xavier Rolet, Chief Executive of London Stock Exchange Group, said:
“We are delighted with the early success of our new fixed income market for retail investors, and have already seen encouraging growth in its range of bonds and in its trading activity. The ORB market provides an attractive market for companies, small and large to raise capital, as well as for retail investors to participate in the fixed income market. Private investors, and the companies whose growth they support, deserve a transparent, central mechanism for the listing and trading of debt and we look forward to driving the growth of ORB in the years ahead to meet this demand.”
Benny Higgins, Chief Executive of Tesco Bank, commented:
“Our first retail bond issued on the ORB has been a huge success, attracting interest from a broad customer base as demand widely surpassed our expectations. As we look to diversify our sources of funding, the appetite for our first bond has given us renewed confidence in the retail bond market.”
Adrian Bell at Evolution Securities, said:
“Evolution Securities is delighted to be playing a prominent role in the development of the ORB and to have successfully completed the largest new retail bond issue to be traded on the platform.
“Evolution’s Fixed Income platform has been a pioneer supporter of the new ORB initiative and has been the most active market maker on the ORB since inception.
"It is pleased now to be originating and structuring new issues targeted at the retail investor base.
“Evolution believes that retail bonds are important not only as a flexible new source of funding for borrowers but it also addresses the problem of a lack of simple and transparent investment products available to retail investors. The issue marks an important step in the development of this market and enhances Evolution's reputation as an innovator in the sector.”
The event was attended by a number of exchange officials, issuers, brokers, market participants and other industry professionals, including representatives from Royal Bank of Scotland, Tesco Bank, Lloyds Banking Group, Evolution Securities, Killik & Co and Numis Securities. They discussed the platform’s first year, and prospects for its development in the future.
There are currently 143 corporate, government and supranational bonds available for trading on the ORB, which are tradable in typical denominations of £1,000 or less. All are exempt from stamp duty and those maturing in five years or more are eligible for inclusion in ISAs and SIPPs. Two way prices for the bonds are displayed continuously throughout the day, alongside full prospectus details of each security, on the London Stock Exchange’s website.
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Notes to editors:
Also called ‘conditional’ or ‘grey market’ dealing, When-Issued-Dealing is a period of dealing with deferred settlement. It takes place in securities which are due to be listed, but before they are officially admitted to trading. Trades during the When Issued period are conditional on the security being admitted to trading and settle once trading has become unconditional. The advantage of When Issued Dealing is that investors can trade a security as soon as its initial offer period has closed, rather than having to wait for it to admit to market.
About the Order book for Retail Bonds (ORB):
The Order Book for Retail Bonds (ORB) is the London Stock Exchange’s electronic platform for private investors trading fixed income securities. The ORB offers continuous, transparent, two-way tradable prices in nearly 150 individual UK gilts, supranational and corporate bonds, all tradable in typical denominations of £1,000 or less. Introduced in February 2010 in response to strong demand from private investors, it offers issuers a high profile route to raise debt capital from a retail audience. For more information go to www.londonstockexchange.com/bondsmadeeasy
About London Stock Exchange Group:
London Stock Exchange Group (LSE.L) sits at the heart of the world’s financial community. The Group operates a broad range of international equity, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS, Europe's leading fixed income market; and Turquoise, offering pan-European and US lit and dark equity trading. Through its markets, the Group offers international business unrivalled access to Europe’s capital markets.
The Group is a leading developer of high performance trading platforms and capital markets software and also offers its customers around the world an extensive range of real-time and reference data products and market-leading post-trade services.
Headquartered in London, United Kingdom with significant operations in Italy and Sri Lanka, the Group employs around 1,500 people. Further information on London Stock Exchange Group can be found at www.londonstockexchangegroup.com.