National Grid's bond issue targets retail investors

13th Sep 2011 14:39

Power grid operator National Grid is offering retail investors the chance to lend it money, by means of a bond issue with a coupon linked to the UK retail price index (RPI).The company has announced a 10-year bond issue that will pay interest semi-annually at a 1.25% annual gross rate of interest, adjusted to take account of changes in the level of the RPI.On maturity, the amount due to be paid to bond holders will be the full face value of the bonds adjusted to take account of any overall increase in the RPI. In the unlikely event that the RPI has fallen during the lifetme of the bond, investors will get the full face value. "There is evidence of strong demand from retail investors for inflation linked products to protect them from certain effects of inflation, and we hope that this product will address some of that demand," said Malcolm Cooper, the Global Tax and Treasury Director at National Grid.The bonds are expected to be listed on the London Stock Exchange (LSE) and to trade on the LSE's Order book for Retail Bonds.The LSE has been attempting to revive the retail market for UK corporate bonds and the decision by a company traditionally regarded as a safe and steady earner to make a proportion of its €15bn Euro Medium Term Note (EMTN) programme available to the person in the street, rather than just institutional clients, represents a feather in the LSE's cap.