Tesco and BT to offer bonds direct to investors

The London Stock Exchange’s new electronic Order book for Retail Bonds has gone live with companies including Tesco and BT taking part.

The LSE says the launch offers continuous two-way pricing for trading in UK gilts and retail-size corporate bonds on-exchange for the first time.

It has introduced the new market in response to strong private investor demand for greater access to fixed income.

Initially, 49 gilts and 10 corporate bonds are available for trading including securities issued by Tesco, BT, National Grid, GlaxoSmithKline, Morgan Stanley, GE Capital, Enterprise Inns and a bond issued specifically for this new service by Royal Bank of Scotland.

Investors can see prices on-screen, and trade in increments from £1 for gilts and £1000 for corporate bonds, in a process similar to share dealing.

Evolution Securities has committed to a leading role and will make markets across all of the gilts and corporate securities on the service. Shore Capital Stockbrokers will make markets in corporate bonds and ABN Amro will quote the new RBS bond.

The new initiative is modelled on Borsa Italiana's MOT market which, with €230bn worth of trading in 2009, is Europe's largest retail fixed income market.

"We are very excited to be launching this new market," LSE Group chief executive Xavier Rolet says.

"There has already been considerable interest in this new platform from issuers, member firms and private investors, and we look forward to further facilitating this growing interest as the market establishes itself over the coming months."