But the London Stock Exchange (LSE) runs a modern equivalent of the old Victorian 'stock' market: the order book for retail bonds or Orb. And for the first time in several months, Orb has two offers open for subscription. The FTSE 250 doorstep lender International Personal Finance (IPF) is offering a 5.875 per cent coupon in exchange for funds repayable in 2022, while Provident Financial (PFG) - from which IPF demerged in 2007 - is paying 5.125 per cent on bonds maturing in 2023. Investors looking for a last-minute Isa filler should take a look.
The conventional attraction of bonds is their income profile, and this remains as relevant as ever. The 100 or so fixed-coupon corporate bonds trading on Orb come with an average yield of 5.3 per cent, which compares with 1.4 per cent for the most generous cash savings accounts. The income appeal of bonds is only likely to intensify as more sophisticated investors ditch annuities and stay invested through retirement.
But there's another reason why private investors should buy retail bonds: held to maturity, they protect the holder from market risk. If you give the Provident £10,000 by subscribing to its latest bond, you can be (almost) sure it will give you back £10,000 in eight years' time, plus an annual £512.50 coupon paid in two instalments in October and April. If you spent the same £10,000 on its shares, you'd probably receive about £420 (based on Peel Hunt's 2015 dividend forecast), and you might get a lot more than £10,000 back, but - crucially - you don't really know.
That's not to say retail bonds are risk-free. They face default risk: if Provident Financial goes bust, bond-holders lose everything. The chances of that for a listed company with a well-established business model are pretty slim, but shouldn't be ignored. The way to manage this risk is diversification: split your bond exposure between at least five companies.
More perniciously, bonds also face the same inflation risk as cash on deposit. If consumer prices rise by the Bank of England's target rate of 2 per cent a year, your £10,000 would be worth £8,535 in today's money on maturity. If inflation averages 3 per cent, you'd only be able to buy goods now worth £6,738.
But for portfolios otherwise stuffed with equities, bonds held to maturity offer a vital hedge against the waves of risk aversion that periodically hit capital markets. Even bond funds don't offer quite the same protection from market risk, as their value depends on the prices investors are willing to pay for bonds on the secondary market.
So why aren't retail bonds more popular? The main reason is lack of supply. Having raised £1.2bn for issuers in 2011 and £1.5bn in 2012, Orb garnered £812m in 2013 and just £686m last year. Banks have started lending again on terms companies have found hard to turn down, and the US private placement market has also been wide open. "It's fair to say we are now operating in competition," says Mark Glowrey, head of retail bond sales for Canaccord Genuity, the brokerage in charge of the IPF issue.
For companies, retail bonds have some advantages over alternative sources of finance. Banks rarely lend for more than five years, so the typical seven or eight-year term of a retail bond is attractive if you want to lock in capital. Moreover, like an IPO, a retail bond issue can generate a public-relations buzz (though the almost complete absence of consumer-facing companies on Orb suggests this effect is not as strong as sometimes claimed).
However, as the wounds of the banking crisis continue to heal, retail bond issues seem to attract an ever narrower group of companies. The Alternative Investment Market - a more established innovation by the LSE, now in its 20th year - has been a great success for companies raising capital but a great disappointment for investors. Orb could end up being the opposite: a great success for investors but a damp squib for companies.
