South East MEP Sharon Bowles welcomes UK's new retail bond market

10.30.00am GMT Thu 4th Feb 2010

Sharon with Vince Cable

Lib Dem MEP Sharon Bowles, who chairs the European Parliament's Economic and Monetary Affairs Committee, has welcomed the launch of 'retail' bonds by the London Stock Exchange this week.

The London Stock Exchange's new electronic order book for retail bonds opened on Monday 1st February and is expected to generate demand of around 20 billion pounds.

Sharon Bowles said:

"Bonds are a way for companies to raise capital by giving a fixed-rate of return for a given investment. Investors like bonds because the income is predictable, unlike income from shares, which can be unstable. However, in the UK there has not been an easy way for small, retail investors to buy bonds until now.

"You could say the UK's new retail bond market has its roots in European thinking - investors in Italy have long been able to buy bonds in quantities tailored for the smaller investor on the Boursa Italiana, which was bought by the London Stock Exchange in 2007. This possibility did not exist in the UK where bonds were only sold wholesale to larger 'professional' investors. Now individuals have the same investment opportunity in the UK.

"As well as benefiting private investors, retail bonds will also benefit larger companies. Right now we hear a lot about banks cutting back on their lending as a consequence of the financial crisis. Raising capital through the issue of bonds is a good alternative for many businesses. Initially 20 billion pounds may not seem a huge extra capacity for bonds but the Boursa Italiana traded 259 billion Euros on their equivalent MOT market."

ENDS