Property firm tempts income investors with 5.25% retail bond

Over the past five years or so a swathe of companies have appealed directly to income starved savers, in launching retail bonds. Juicy yields, some of which have been in excess of 7 per cent, 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 per cent, which will be paid to investors twice a year. Not since April 2016 has a retail bond offered a coupon of over 5 per cent.

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, 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.

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