Beazley unveils bond paying 5.375%
Specialist insurer Beazley has launched a seven-year corporate bond with a 5.375% coupon.
Interest will be paid twice a year and the minimum investment is £2,000. The bond will mature on 25 September 2019.
Beazley is hoping to raise between £50 million and £75 million through the bond issue. The bond will be available until 10am on 20 September, but may close early subject to demand.
It will begin trading on the London Stock Exchange's Order Book for Retail Bonds on 25 September.
Beazley, which is listed on the FTSE 250 and is one of the biggest Lloyds-based insurance and reinsurance groups, is the first insurer to issue a bond for retail investors on the ORB.
Beazley finance director Martin Bride comments: "Effective capital management has been one of the keys to our success at Beazley and this issue will help diversify our sources of capital further while offering - we hope - an attractive return to retail investors."
Phil Wong, a stockbroker at Redmayne-Bentley, comments on the issue: "If previous issues are anything to go by this offering could see similar levels of strong interest.
"If investors are prepared to take more risk than a high street deposit account, there are opportunities to seek much higher levels of income; in this case investors can achieve a return of 5.375%."
Beazley has been given a BBB+ rating by Standard and Poor's. Redmayne-Bentley rates the issue as a low to medium risk investment.
The bond is available to residents of the UK, Guernsey, Jersey and the Isle of Man.
This article was written for our sister website Money Observer
Corporate bonds are one of the main ways companies can raise money (the other is by issuing shares) by borrowing from the markets at a fixed rate of interest (the reason why they are also known as “fixed-interest securities”), which is called the “coupon”, paid twice yearly. But the nominal value of the bond – usually £100 – can fluctuate depending on the fortunes of the company and also the economy. However it will repay the original amount on maturity.