Provident Financial launches inflation-beating bond paying 7%

19 March 2012

Provident Financial has unveiled an inflation-beating bond paying a coupon of 7%.

The five-year corporate bond will pay the interest twice-yearly in April and October. The bond will mature on 4 October 2017.

Provident Financial is rated BBB by credit ratings agency Fitch, which means it is still investment grade, although the rating does mean that the company is slightly more vulnerable to a default.


Philip Wong, stockbroker at Redmayne-Bentley, which will be distributing the bond, says inflation-beating corporate bonds have been very popular with investors over the past year.

"Over £860 million has been invested in bonds with Lloyds, National Grid, Provident, Tesco and Intermediate Capital Group, so I'm sure there will be plenty of interest," he comments.

Applications for the bond close on 30 March at 10am, although Wong highlights that high demand may lead to the deadline being brought forward. It is available from stockbrokers and wealth managers.

The Consumer Prices Index measure of inflation stood at 3.6% in January, down from 4.2% in December. The Retail Prices Index, which includes mortgage interest payments, fell from 4.8% to 3.9% in January.

This article was written for our sister website Money Observer

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