So far, 23 issues have raised £3.2bn between them in just three years, and we've devoted many column inches to analysis of them, a reflection that retail bonds have firmly cemented their place in the investment landscape. But could regulatory forces derail the market before it's had a chance to move beyond adolescence?
That's certainly a concern expressed by Richard Tice - chief executive of property development group CLS Holdings, which successfully tapped the market for £65m last September - when I met him last week. He's so worried, in fact, that he's spearheading a new lobby group, Orbig, to protect the interests of issuers like his company.
Mr Tice is particularly troubled by suggestions that retail bond issues should be rated, as bond issues are on the wholesale debt markets. That, he says, would add a significant layer expense which smaller issuers could ill-afford, and to no real benefit to the retail investor.
In short order that could stymie further development of what has quickly become a vibrant market. And, says Mr Tice, it's vital Orb exists to keep the wholesale debt market honest - certainly Orb's electronic market offers far greater pricing transparency than the wholesale bond market, so it's been no surprise to see larger companies tapping it, too.
That's not to say that Orb doesn't need to evolve further. Mr Tice admits that there has been some "inconsistency" around the prospectuses, and the market remains dominated by property companies and financial services providers. The recent issue by oil producer Enquest was a welcome departure from this trend, and Mr Tice is confident that there are a raft of FTSE 250 companies waiting to follow suit when their banking arrangements come up for renegotiation.
And even if it doesn't support rating retail issues, Orbig isn't hiding the fact that like all investments, retail bonds carry risk - it's also backing moves to make the risks of retail bonds more transparent to investors, including a new retail-friendly risk rating system being developed at two soon-to-launch credit research firms that will, importantly, assess the quality of covenants, an area of past confusion. It's a mature approach from a young market, and why we think Orb should be left to develop at its own pace.
