How safe are mini-bonds?

How safe are mini-bonds?

James Tomlins, fund manager at M&G Investments, says the rise in mini-bond issuances also raises questions regarding investor protection.

One of the many unintended consequences of structurally low interest rates over the past few years has been the emergence of mini-bonds in the UK. These are typically non-tradable debt instruments issued by companies directly to individual investors. London-based Mexican food operator Chilango successfully completed its £2m mini-bond issue via crowfunding this summer, but at the same time, its issuance highlighted some of the risks within the mini-bond sector, relative to the more established institutional bond market. From very limited disclosure, an absence of legal covenants, la...