In contrast to the flood of mis-named mini-bonds, which are really a form of illiquid direct loan to companies by investors, the ORB bond market has been notably quiet since the issue of the A2Dominion housing association bond earlier in the autumn. But activity has moved onto the "tapping" of individual bonds - where additional bonds of the same issue are sold into the market in a bid to raise liquidity - which is exactly what specialist door-step lender International Personal Finance (IPF) plans to do with its 6.125 per cent 2020 bonds.
As much as £70m of IPF 2020 bonds were issued earlier this year and were significantly over-subscribed at the time as investors continued to hunt for yield. Prices have remained steady with the bond maintaining a small premium to par. The tapped issue will bring the total amount of 6.125 per cent bonds in issue to over £100m and will be "fungible", in the jargon, with the existing bonds. The issue price will be calculated in relation to the current market price of somewhere between 100-101p.
One potential technical problem for investors will be that new bonds will go on sale during the coupon period for the existing bonds. If the issue comes after the semi-annual payment date later this month, investors will have to pay for a few days of accrued interest, rather than the "clean" price that you would expect to find on a normal issue. Mark Glowrey, head of sales at CannacordGenuity, said: "Tapping existing issues is a good route to expanding the liquidity and attracting larger investors into the market - including institutions."
