Fintech startup wants individual investors to buy big corporate bonds
Fintech start-up wiseAlpha wants smaller investors to take a bite out of the multi-billion pound corporate bond market.
The online investment platform is widening access to individual corporate bonds for UK companies such Enterprise Inns, Vue Entertainment and New Look for as little as £100.
wiseAlpha will issue notes, which are backed by loans or bonds it has bought, to retail investors. "This mechanism allows smaller investors to participate in loans or bonds they could not otherwise access," it said.
The company charges an annual service fee on one per cent on the cash used to buy a bond, as well as a 0.25 per cent investment fee.
wiseAlpha told Bloomberg that to achieve the target yield of five to eight per cent, most bonds will be rated between B and BBB. Bank of America Merrill Lynch index data shows that the average yield on speculative-grade bonds in euros fell to a more than one-year low of 4.2 per cent last week.
Rezaah Ahmad, chief executive and founder of wiseAlpha, said: "The ability to purchase corporate bonds in small denominations has never before been possible for the private investor."
"Retail investors are often crowded out of retail bond issues by institutional investors and their choice is often limited to financial based companies rather than a broad range of corporates across different sectors."
"In addition, the ability to purchase secured corporate bonds in small denominations has never before been possible for the private investor."