Monday, 7 February 2011

Corporate Bonds: Tesco, First Group and Imperial Tobacco

Corporate bonds are part of the Level 7 investments of the Income Pyramid of the DIY Income Investor approach. They are effectively loans to companies, but are traded a bit like shares (i.e. their value fluctuates). Bonds offer the opportunity to 'lock in' a fixed rate of income - either over a limited time horizon (up to a date when the underlying loan amount is repaid) or as a perpetual loan.

Tesco is offering a 5.2% bond with redemption in 2018 (long enough for it to be allowable in an ISA). See the review by This is Money's Midas for a view on this bond. The Investors Chronicle has a slightly less positive view.

Midas also has published reviews of bonds issued by First Group and Imperial Tobacco.

I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

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