European firms tap into retail investor bond rush
* Retail investors catch corporate bond fever
* A new source of funds for companies
* Search for "yield" drives retail investor demand
LONDON, July 3 (Reuters) - King of Shaves, a British shaving products firm, has invited customers to invest in a 5 million pounds ($8.21 million) bond, showing companies are capitalising on a surge in retail investor demand for such fixed income assets.
Institutional investors have already gobbled up some 200 billion euros ($280.4 billion) of corporate bonds issued in the first half of the year and now retail investors have worked up an appetite too.
King of Shaves' bond is tiny, but a string of big European companies, including oil company BP (BP.L), car maker Volkswagen (VOWG.DE), Italian oil company ENI (ENI.MI) and France's EDF (EDF.PA) have issued several billions of euros in bonds, partly aimed at small investors and more issues of this kind are expected.
BP's 500 million pounds bond last month, for example, saw strong retail investor demand.
"Some 40 retail intermediary accounts placed orders, mainly UK and Swiss," said Mark Lewellen, a managing director at Barclays Capital.
"When you get close to zero on savings and can buy an AA1 rated company bond with a 4 percent coupon it makes sense for retail investors," he said.
France's EDF plans to close a retail bond issue earlier than expected on July 6 after raising more than 2.5 billion euros in the past two weeks. [ID:nL1903215]
In Britain, retail flows into corporate bond funds, for example, made up nearly half of total retail flows into investment funds in May, according to data from the Investment Management Association.
Retail flows into bond funds in the UK so far this year totalled nearly 6 billion pounds, more than the total flows for the whole of 2008 and also more than the total for every year since 1999, according to IMA data.
CHASING YIELD Continued...
