Britain's
largest specialist buy-to-let mortgage lender and consumer finance group
Paragon has issued the first retail bond of the New Year with an eight-year product
offering a coupon of 6.125%.
This is
the second retail bond from the company, following its successful issue in
February 2013 – (ParagonTempts the Market at 6% - Retail Bond Expert February13th 2013)
Nigel
Terrington, chief executive at Paragon, believes the business has been
expanding well and is optimistic for its future prospects, saying: “Paragon
delivered strong growth in 2013, surpassing £100 million of profit for the
first time in the Group’s history.
Enhanced Funding
‘In the
past year our lending was up 90% on the previous year and we invested nearly
£100 million in the buying of loan portfolios,’ he explains, adding ‘The
property market is healthy but alongside that we have increased our overall
financial capacity through enhanced funding.’
Mr
Terrington said that the company was also making good progress with its plans
to establish a bank and return to consumer lending during 2014.
The group
posted record profits of £105 m in its end of year report, which was published
in November 2013.
The new
issue will pay a coupon of 6.125% semi-annually in arrears, on 30th January and
30th July each year until maturity in January 2022, with the first coupon paid on
30th July 2014.
The
minimum initial subscription is £2,000 with further purchases in £100
increments, and the planned closing date of the offer is 27th January.
Increase on Previous Coupon
This is
an increase on the 6% coupon offered last February which, according to Terrington
‘reflects that all long-dated interest rates have gone up’.
The
previous issue raised £60 million and such was the demand that it closed four
days early; Terrington says that no target figure has been set for this second
issue, but suggests a similar figure ‘is in our minds and would be a good
target level to get to’.
Paragon
is a FTSE 250 company with £10 billion of assets under management.
The launch comes hot on the heels of good news for retail bond investors
from the Treasury which confirmed that the rate of inflation as measured by the
Consumer Price Index had slowed to the Monetary Policy Comittee’s (MPC) target
of 2% in December – the first time it had done so in more than four years.
Inflation accelerated as much as 5.2% in the autumn of 2011 before
falling back towards the target, prompting calls by some for the MPC to tighten
monetary policy.
The recent decline in the inflation rate could mean the Band of
England keeps interest rates at their record low of 0.5% for longer.
Chris Williamson, economist at Markit, said: ‘The easing in price
pressures is a welcome relief to policy makers at the Bank of England and helps
keep the spectre of higher interest rates at bay. Low inflation allows monetary
policy to remain loose in the face of faster than expected economic growth and
plummeting unemployment.’
Some analysts predict further falls as inflation abates across developed
economies.
So, will Paragon’s 6.125% be enough to tempt you to invest, or are you
inclined to answer the siren call of strong equity markets?
Currently the pink pages’ acronym of choice, you may decide to look to the MINTs* with a whole new investment perspective.
* Mexico, Indonesia, Nigeria & Turkey
Mr
Bond invites you to share your thoughts about the
current issue and to discuss your strategy for the year ahead – together we really are stronger.