Unite closes retail bond early after investor demand

  • @MLeftly

A £75m retail bond will close early on Monday as investors flocked to its generous returns, just days after haulage group Eddie Stobart was forced to abandon its own offer.

Unite, which runs student accommodation in more than 20 cities from Aberdeen to Bournemouth, was originally due to close its offer period on Wednesday. But the 6.125 per cent pay-out on a minimum £2,000 investment has proved popular enough to move that deadline two days early.

Eddie Stobart was only paying 5.5 per cent, which the company admitted was not competitive against other fixed rate bonds, like Unite's, that were being marketed at the same time.

Unite is trying to diversify its debt so that it is not entirely reliant on loans from banks. Over the coming years, new fiscal rules are likely to mean that banks cannot offer as competitive terms, particularly to property-focused firms, and will demand repayment over a shorter period of time than companies dealing in long-term projects would like.

Unite chief executive Mark Allen said: "Our sector is something that chimes with retail investors and is is quite easy to understand. They have a reasonable idea of what we do, from their own student days or the experiences of their children." About 40 per cent of Unite's debt now comes from sources other than banks, which Mr Allen described as "good housekeeping". The group had targeted £50m-£75m with this retail bond, so it hit the upper end of its expectations.

These bonds are proving increasingly popular. On Wednesday Standard Life announced a £500m bond, and Tesco Bank and the London Stock Exchange have also recently launched bonds.