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Energy firm launches 7.5% retail bond

Australian renewable energy firm CBD Energy has launched a four-year retail bond paying a fixed rate of 7.5 per cent interest, Moneywise Magazine has reported.

The company is hoping to raise up to £7.5m from investors from its ‘EnergyBonds’.

Interest will be paid quarterly in cash and the minimum investment is £500. The bonds are eligible for self-invested personal pensions but may not be held in an Isa.

Bondholders will be able to redeem the EnergyBonds after four years by giving six months’ notice in writing. Otherwise, the term is automatically extended for further periods of 12 months. The bonds are not listed and cannot be traded on the secondary market.

While CBD Energy is headquartered in Sydney and listed on the Australian Stock Exchange, the bonds are actually being issued by Energy Bonds, a wholly-owned UK subsidiary of CBD Energy. Capita Registrars is handling the bond issue.

According to Moneywise Magazine, the bonds are classified as unsecured debt. This means it ranks equal with all other unsecured debt of Energy Bonds, in the case of it going into liquidation.

CBD Energy acts as the guarantor, but if CBD Energy also becomes insolvent there is a risk bondholders will not receive all their money back.

EnergyBonds are not covered by the Financial Services Compensation Scheme.

The bond offer runs from 1 June to 2 July, but it may close early if the £7.5m target is reached.

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