Paragon issues retail bond paying 6.125%
Buy-to-let lender and consumer finance group Paragon has issued an eight-year retail bond with a coupon of 6.125%.
This is the second retail bond from the company, following its successful issue in February 2013.
Nigel Terrington, chief executive at Paragon, says the business has been expanding well and there is every chance it will continue along the same trajectory.
"In the past year our lending was up 90% on the previous year and we invested nearly £100 million in the buying of loan portfolios," he explains.
"[That increase] is because the property market is healthy but alongside that we have increased our overall financial capacity through enhanced funding lines, as well as the retail bond, and that has given us greater firepower," he adds.
The group posted record profits of £105 million in its end of year report, which was published in November 2013.
The loan will pay a coupon of 6.125% semi-annually in arrears, on 30 January and 30 July each year until it matures in January 2022. The first coupon will be paid 30 July 2014.
The previous issue paid a coupon of 6% and Terrington says the increase simply "reflects that all long-dated interest rates have gone up".
That issue raised £60 million and was heavily over-subscribed, closing four days early. Terrington says that while an amount has not been set for this second issue, that figure "is in our minds and would be a good target level to get to".
The minimum initial subscription is £2,000 with further purchases in £100 increments, and the issue is expected to close on 27 January.
Paragon is a FTSE 250 company with £10 billion of assets under management.
This article was written for our sister website Money Observer
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.