Stobart Group Plc 5.5% 04/12/18

National Transport Distribution company Stobart Group Ltd is issuing a six year sterling bond with a 5.5% coupon.

Though the issue does not carry a credit rating, we feel this bond looks good value against the 3% and 4.5% GRYs offered by Go Ahead and FirstGroup around the same maturity. With the general consensus forecasting a long period of low interest rates, the issue looks attractive. The senior ranking of the bond combined with covenants suggest that the bond offers a good risk/return ratio.

We are taking orders for settlement until the 27th of November, however we expect the issue to close early due to strong demand. If you would like to purchase some bonds at par (the minimum size is £2,000 and they trade in multiples of £100 thereafter), please register your interest with your stockbroker or by contacting us on 200 75181 or email to dealers@gam.gi.

As a company that ‘actually does something’, the bond offers a good opportunity to diversify from recently issued bonds that have mostly come from the finance and property sectors. Similar issues have traded above par after admission to trading in the secondary market and with a target raising of just £25m, we expect this bond to do the same.