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

“This year has begun a little slower than expected,” says TobyCroasdell, director of the medium-term note syndicate at Barclaysin London. “Especially as yields have compressed, a number ofpotential borrowers have been sidelined. But in the last fewmonths, we have started to see the increase in breadth of issuerswhich the investor community has been keen for. This has been ledby new names, many of whom have been mid-cap companies rather thanthe big FTSE 100 names.”

To date, the largest transaction in the UK was National Grid'sissue in September 2011. “For us, the key thing really was one ofinvestor diversification,” says Malcolm Cooper, the company'sglobal tax and treasury director, pictured at right. “Our interestwas particularly in index-linked debt—with over 5 billion poundsoutstanding already, we are one of the largest issuers ofindex-linked debt in the UK, which means that there is limitedinstitutional investor demand for further index-linked issuancefrom us. Retail investors gave us an additional opportunity.”