The Downing Bonds platform offers investors the opportunity to invest in unlisted corporate bonds.
What is the difference between listed and unlisted corporate bond?
The primary distinction between the two lies in their trading status and investor accessibility. Listed bonds are more liquid and publicly accessible, while unlisted bonds are more exclusive and flexible but less liquid.
Listed Corporate Bonds:
- Traded on public exchanges.
- Offer greater liquidity and accessibility to a broader range of investors.
- Require greater transparency and regulatory oversight.
Unlisted Corporate Bonds:
- Sold privately, typically to institutional investors.
- Less liquid and often require less transparency and regulatory oversight.
- Provide companies with more flexibility and lower administrative costs.
It is important to understand the risks associated with investing in unlisted corporate bonds. These are high risk products and whilst they might offer higher returns than some listed bonds, they typically present more risk to the investor. Investors should be prepared to lose all or some of the money they invest in these types of products.
Who are the borrowers?
- Borrowers are typically small to medium sized companies with tangible assets.
- These businesses usually have lower risk profiles compared to start-ups.
- They are typically seeking cheaper funding to replace more expensive finance taken earlier in their lifecycle.
How are the funds used?
- Funds raised through our bonds are often used to refinance more expensive funding. They can also be used to fund the purchase of land, property or other assets.
How is my investment secured?
- Downing Bonds are often secured against a business or underlying business’s assets.
- Downing acts as a security trustee with a debenture over these assets.
- If the borrower defaults, Downing can sell the assets to repay some or all of your capital and interest.
What are the risks?
- These are high-risk investments. If the business offering this investment fails, there is a high risk that you will lose all your money.
- Your capital is at risk and your money is not covered by the Financial Services Compensation Scheme (FSCS) deposit protection scheme.
- Investors could lose all or some of the money they invest, and interest is not guaranteed.
- The bonds are fixed term and non transferable meaning there will be limited liquidity.
- There is the possibility that loan repayments from the Borrowers may not be made and, therefore, expected interest payments to investors may not be possible due to insufficient liquidity.
What fees do Downing take?
- Downing receives a fee for arranging and managing bonds on the platform. This is paid by the borrower, meaning the rates of interest advertised is the rate investors should receive. Each offer document includes a page detailing the fees we receive for that bond and when they are due.
- The arrangement or monitoring fee will vary depending on the company issuing the bond and the amount invested.