Marketing corporate debt directly to retail investors, a well-established practice in the United States, is just getting started in the UK. The market effectively opened in 2010 when the London Stock Exchange launched its Order book for Retail Bonds (ORB), a service via which retail bonds can be traded in denominations of 1,000 pounds. After raising only 230 million pounds in its initial year, the market showed dramatic growth in 2011 with total issuance of more than 1.2 billion pounds. So far 2012 hasn't quite matched this pace; as of the end of August, the UK market had raised 635 million pounds, bringing total issuance since the market opened to over 2 billion pounds.

“This year has begun a little slower than expected,” says Toby Croasdell, director of the medium-term note syndicate at Barclays in London. “Especially as yields have compressed, a number of potential borrowers have been sidelined. But in the last few months, we have started to see the increase in breadth of issuers which the investor community has been keen for. This has been led by new names, many of whom have been mid-cap companies rather than the big FTSE 100 names.”

To date, the largest transaction in the UK was National Grid's issue in September 2011. “For us, the key thing really was one of investor diversification,” says Malcolm Cooper, the company's global tax and treasury director, pictured at right. “Our interest was particularly in index-linked debt—with over 5 billion pounds outstanding already, we are one of the largest issuers of index-linked debt in the UK, which means that there is limited institutional investor demand for further index-linked issuance from us. Retail investors gave us an additional opportunity.”