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Product Analysis: Wasps 6.5% secured retail bond

Cherry Reynard
Written By:
Cherry Reynard

Rugby club Wasps has launched a new bond with an attractive headline rate, but should investors snap it up?

What’s new?
Premiership rugby club Wasps has today launched a 6.50 per cent Secured retail bond, which will mature in 2022. It is the first time a sports club has launched a bond of this type. The group also owns the Ricoh Arena in Coventry, a sports, exhibition, conferencing and events arena.

The details…The bond issue seeks to raise between £25m and £35m and will be secured on Wasps Holdings and Arena Coventry Limited, including the Ricoh Arena. Interest will be paid semi-annually on 13 November and 13 May, with the principal repaid in full on 13 May 2022. The minimum investment is £2000 and closes on 6 May.

They say… David Armstrong, group chief executive of Wasps says: “We are delighted to announce the launch of Wasps’ debut retail bond, which will be tradable on the London Stock Exchange’s Order Book for Retail Bonds and is the first transaction of its kind for the sports industry. The move to the Ricoh Arena was transformational for Wasps and our new home provides us with multiple income streams and the opportunity to create of one of the UK’s premier sport, business and entertainment complexes, while offering sponsors and partners the exciting opportunity to get involved with the new second home of English rugby. This is another step in achieving our aim of creating a long-term sustainable business model.”

Good news? With interest rates at 0.5 per cent, 6.5 per cent is undoubtedly an attractive income. The Ricoh Arena, the group’s new home, includes a 32,600-seater stadium, a concert venue of 40,500 capacity and a 6,000sqm indoor facility that can host up to 12,000 people, as well as a casino, two restaurants, 121 room hotel and over twenty retail, food and drink outlets onsite. Equally, at the end of the investment term, investors should receive their money back, as long as Wasps does not default on the bonds.

Any caveats? An income of 6.5 per cent does not come without risks. Investors will only get their income and capital back if the company backing the bond is able to keep paying it. These retail bonds are not covered by the Financial Services Compensation Scheme, which normally protects investors to the tune of £85,000 should a bank default.

Equally, the secondary market for retail bonds is unpredictable and there is no guarantee that investors will receive the face value of the bond should they choose to sell out before it matures.