Fixed Income  

Ladbrokes bond a good long-term bet

The chairman of the Orderbook for Retail Bond Issuers Group, which promotes the merits and understanding of retail bonds listed on the London Stock Exchange’s order book for retail bonds trading platform, said Ladbroke’s eight-and-a-half year retail bond issue announced last week would be likely to attract money freed up from pensions post-Budget.

He said: “Ladbrokes is a BB-rated company that is extremely well known on the high street, making this issue fantastic for the retail bond market – it is to be warmly welcomed.

“It is also good from investors’ standpoints to have a long stream of income.”

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The Ladbrokes bond yields 5.125 per cent and is due to mature in 2022. Interest will be paid in two equal instalments a year on 16 September and 16 March, with the exception of the first payment being made on 16 September 2014.

Adviser view

Adrian Lowcock, senior investment manager for Bristol-based Hargreaves Lansdown, said: “The key thing here is that this bond is listed on the Stock Exchange, which provides liquidity.

“However the term is quite long and while the yield may sound attractive now, it may not once interest rates start to rise, when yields are likely to rise and prices fall – it may not be a bond to get in at issuance, but to delay for a few years.

“The pricing now also looks as though it’s in the lower high yielding stakes, which underlines the need to look behind the headlines at the underlying business’ likelihood of default.”