What are Retail Bonds?

Retail bonds are suitable for businesses of all sizes and across all sectors, helping them tap into a new pool of capital outside of the traditional wholesale markets. A wide range of companies issue bonds on our retail platforms, from large household names like National Grid through to midcap companies such as Workspace Group, a provider of office space for small and medium-sized companies. With a range of maturities, various structures and issue sizes ranging from £25m to more than £300m, retail bonds offer flexibility to firms looking to raise debt finance.

Issuers have two options when looking to admit retail bonds to London Stock Exchange’s markets – the Order Book for Retail Bonds and the Order Book for Fixed Income Securities. Raising capital through retail bonds has a key benefit: diversification of funding. A typical retail issue is supported by around 100 wealth and institutional fund managers, representing the interests of several thousand individual investors. Accessing a wider investor base and raising a company’s public profile are two of the further benefits a retail bond issue can offer. 

The market structure

• ORB  - In  2010  the  London  Stock  Exchange  introduced  the  Order  Book  for  Retail  Bonds  (ORB)  in  response  to  growing  private investor  demand  for  greater  accessibility  to  fixed  income  securities.  This order-driven trading  service  offers  access  to  a  number  of gilts, supra-national and corporate bonds, and has been developed in response to strong demand from retail investors for access to an on-screen secondary market in fixed income securities. ORB is the first electronic retail bond order book allowing private investors to trade bonds as easily as they would shares. This market model  provides  issuers  with  the  opportunity  to  raise  capital  while  having  their  retail  bonds  traded  on  a  transparent,  regulated market. 
• OFIS - Issuers also have the option of admitting retail bonds onto The Order Book for Fixed Income Securities (OFIS). This is a suitable option for retail bonds with more complex issuance structures. OFIS provides issuers with the same electronic trading capabilities, and offers the full suite of flexibility for issuance options.