Retail Bonds: Communicating in a restricted environment

Last week the Order book of Retail Bonds (ORB) celebrated its seventh anniversary at the London Stock Exchange. Since its formation there have been 33 issuing companies to the ORB, highlighting the growing popularity of this debt instrument.

Yet, while an increasingly popular source of finance, the strict regulatory controls around communicating with retail investors mean that successfully raising the profile of an issuance and communicating the corporate strategy are far from straightforward. For example, the language and imagery in advertisements or collateral is highly regulated, often with a requirement for considerable legal and regulatory disclaimers that can encompass half the available space. Likewise, press releases, related written material and media interviews face very strictly enforced rules preventing financial promotion that restrict what issuers can say.

By developing tailored and strategic communications, businesses can raise their company profile and engage with a diverse and liquid pool of investors. Communications, when done well, can have an important role to play in the success of a retail bond – raising awareness and articulating the organisation’s strategy. Indeed, some firms who have conducted retail bonds which attained significant profile have reported that the increase in profile among retail investors has had a positive knock-on impact on their equity as well.

As the market continues to mature, retail bonds remain a reliable and regular solution for investors hungry for yield. Effectively communicating and creatively articulating the ‘story’ behind new issues – while staying within regulatory restrictions – will be crucial to ensure the future success of issuances and longevity of the ORB.


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