A new retail bond paying an 8.25% coupon has launched, beating the interest rates on top savings accounts.
The best savings account currently pays 4.7%, while customers can get up to 7.5% with a regular savings account.
Alternative property lender LendInvest’s 8.25% bond will likely appeal to savers fed up with falling interest rates, and investors looking for regular income.
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Retail bonds pay a fixed rate of interest – known as the “coupon” – for a set period. They are issued by companies and charities looking to raise extra capital by borrowing from investors.
How will the LendInvest retail bond work?
The LendInvest bond will pay investors a fixed 8.25% rate bi-annually until its maturity in 2030. The offer period is expected to close on 11 November.
The bonds – which represent LendInvest’s fifth issue – will be listed on the London Stock Exchange’s Order Book for Retail Bonds and are available via AJ Bell, Hargreaves Lansdown, Interactive Investor and other major platforms.
The minimum initial subscription is £1,000, with increments of £100 thereafter. Interest payments are expected to be made on 18 May and 18 November in each year, with the first due on 18 May 2026.
The new bonds are expected to be admitted to trading on the London Stock Exchange's regulated market and through the electronic Order Book for Retail Bonds (ORB) on 18 November 2025.
So, what is LendInvest exactly? A UK-based alternative property finance platform, it provides short-term, development and buy-to-let mortgages to professional property investors and developers.
The company is listed on AIM. As at 31 March 2025, it reported funds under management of £5.13 billion and platform assets under management of £3.23 billion.
LendInvest says it has a strong track record, having repaid its previous two matured bonds in full without loss to its holders.
It says that investors buying the new bond “can gain exposure to a diversified and fast-growing portfolio of asset-backed UK property loans. This ranges from buy-to-let and bridging finance to residential and commercial development, aimed at experienced and professional borrower clients”.
Rod Lockhart, CEO of LendInvest, said of the new bond: “This issuance represents the continued development of our secured-income programme and provides investors with access to bonds backed by UK property-finance assets within a clearly defined structure.”
If you already hold a LendInvest bond, you may be able to swap it for the new issue under a proposed “exchange offer”. This would allow holders of the outstanding 11.5% notes due 2026 and 6.5% notes due 2027, each issued by LendInvest Secured Income II plc, to exchange their holdings for the new bonds.
What are the risks of retail bonds?
First, let’s look at the differences between savings accounts and retail bonds. Cash held in UK savings accounts is protected by the Financial Services Compensation Scheme (FSCS), with up to £85,000 per person, per banking licence, covered in the event of a collapse.
Retail bonds, however, are not covered by the scheme. So if the issuer were to go bust, there would be no guarantee that investors would receive their money back.
Laith Khalaf, head of investment analysis at AJ Bell, tells MoneyWeek: “While the headline rates on retail bonds might be extremely attractive, there’s no such thing as a free lunch when it comes to investing, and higher levels of interest generally reflect more risk.
“Investors need to consider the return of their money, as well as the return on their money. If a company you loan money to goes bust, then you may lose some or all of your capital, as well as outstanding interest payments.”
He says it’s crucial that investors have a handle on the finances of the company (or charity) issuing the bonds before buying them, which can be found in their accounts, and most specifically the balance sheet.
Khalaf adds: “If your retail bond doesn’t repay your capital in full, then you have no recourse to the FSCS. Consumers need to treat retail bonds as an investment, which carries capital risk, rather than as a high-interest savings account, which largely doesn’t.”
Having said that, it’s worth pointing out that while retail bonds like the LendInvest one have risks, they are not “mini-bonds”, the advertising of which has been banned by the Financial Conduct Authority.
LendInvest’s retail bonds will be traded publicly on the London Stock Exchange (LSE), so investors have the reassurance that the stock exchange’s requirements have been met.
What is the Order Book for Retail Bonds (ORB)?
The LSE introduced the Order Book for Retail Bonds (ORB), a dedicated platform for bonds aimed at retail investors, in February 2010.
Traditionally, bonds are traded in lots of £100,000, making it all but impossible for the average investor to buy a portfolio of their choosing. However, on the ORB, the majority of issues can be traded in lots as low as £100.
The ORB hasn’t really taken the market by storm. After an initial flurry of trading, new issues dried up, although a few firms continue to use the platform.
Companies using the ORB over the past few years include International Personal Finance (bond maturing on 12 December 2027 and paying 12% per annum), and Belong (paying 7.5% through to July 2030).
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